Editor’s Note – So Jack Welch supposedly joined the “conspiracy theorists” when he tweeted his doubts and blamed the Chicago thugs for cooking the books. Well, now it appears he was dead on!
How can the so-called “experts” who work at the “non-partisan” Bureau of Labor Statistics miss a whole state? Reportedly a large state, likely large enough to skew the results, was left out of the numbers? Did no red flags pop up when the report was compiled?
CNBC and Dow Jones have both confirmed that this latest weekly jobless claims report was missing data from one large state. Bloomberg noted that the Labor Department spokesperson said that one state accounted for most of the plunge in claims.
For the second time in a week, a government unemployment report is sowing confusion—and may not be as positive as the markets think.
Financial markets immediately rallied on the news. (Read more: Stocks Rise After Jobless Claims Hit 4-Year Low.)The Labor Department on Thursday said the number of people filing jobless claims last week dropped by a seasonally adjusted 30,000—a pretty sharp decline, and one that left the total number of filings at a four-year low of 339,000.
While the government didn’t note any unusual factors in the release itself, a Labor Department official did tell news agencies covering the release about a quirk which partly accounted for the larger-than-expected drop.
The wording of that statement, along with the accompanying headlines, left the impression that one major state didn’t turn in its figures.
Here’s what actually happened. The state did report weekly jobless claims but did not process and report its quarterly claims number (when many people have to reapply for benefits for technical reasons as opposed to being newly laid off). As a result, there wasn’t the expected spike in claims that normally happens at the start of the quarter.
It is unclear why that happened or how unusual that is. What is clear is that the expected spike in claims around the start of each quarter was smaller this time than usual. Coupled with the seasonal adjustment (that expected a bigger increase), that pushed down the headline figure.
In other words, the drop of 30,000 last week had more to do with the lack of expected re-filings at the start of the fourth quarter than with any particular improvement in labor market conditions.
That also means that the decline which usually follows the spike won’t be as pronounced this time around, so the headline tally of jobless claims is likely to rebound next week.
All told, these two weeks’ worth of jobless claims will end up being more noise than signal. That may frustrate those who follow the series closely for clues into the health of the U.S. labor market. Coupled with last week’s payrolls report, it is also likely to fuel perception that labor market figures in general can’t be trusted.
The Labor Department appears to have had little choice in this matter, however; it couldn’t estimate what the one large state would or should have reported. Still, it may have been able to avoid more confusion had it more clearly articulated that in its weekly press release.
And now, there is one state’s labor department with plenty of explaining to do.