The Department of Labor released the weekly unemployment claims numbers Thursday morning, and, as is often the case with Trump-era financial data, the media is emphasizing the most negative news and burying the good news.
And, as usual, there is good news. While initial claims are still over 1 million, total claims for traditional unemployment benefits are actually down, and way down.
Keep in mind that initial claims numbers show only new applications for unemployment insurance benefits. They do not show whether the total number of people receiving unemployment benefits has increased or decreased. Those numbers come out a week later than the initial claims numbers and can tell a far different story.
Let’s say that, in one week, an employer (like Amazon) employs 2,000 people from the ranks of unemployment benefit recipients while another employer (like Boeing) terminates 1,000 employees that same week who then make initial claims for unemployment insurance benefits.
The impact would be to increase initial claims by 1,000 even though the total number of people receiving unemployment benefits would decline by 1,000. The point is that if you only look at the initial claims numbers, you may miss the positive news that the overall situation has vastly improved.
A case in point, for the week ending Aug. 15, initial claims exceeded 1 million after dropping below that number a week earlier. NBC ran a piece declaring that “Initial jobless claims rise above 1 million again, after two weeks of declines.”
But this morning the Department of Labor released the continuing jobless claims numbers for last week and, despite the much touted addition of over 1 million initial claims, total claims actually declined by 223,000. While some outlets will mention it, don’t spend much time looking for a headline declaring that “Continuing claims for unemployment insurance drop by 223,000.”
In fact, while initial claims have generally been near or above 1 million for months now, the total number of traditional claims has dropped from 25 million in the first week of May to 14.5 million last week. That’s still too high, but it is also a drop of 42 percent in 15 weeks with many states still in partial lockdowns and the virus still with us.
By any measure, that is significant progress. It is also consistent with the historic addition of 9.5 million jobs and a 4.5 percentage point drop in the unemployment rate (from 14.7% to 10.2%) over the past three months.
Despite what you may read elsewhere, thanks to President Trump’s economic policies, the economy is surging ahead despite the virus and despite the Democrats’ pessimism.
One interesting question is how these continuing claims numbers foretell the unemployment rate and job creation numbers for August, which come out next Friday.
What we know so far is that during the first two weeks of August, the number of people receiving unemployment insurance benefits declined by 945,000 or 6 percent. That could augur well for the month’s employment numbers. We’ll see how the next two weeks look, but you read it first here.
So, when you read this morning’s headlines from, for example, Yahoo Finance — “Another 1.006 million Americans filed new unemployment claims last week” — or NBC — “Weekly jobless claims decline slightly to 1 million” – keep in mind that those headlines do not tell the whole story, which is actually very good.
The author is the former CEO of CKE Restaurants as well as a former Montecito resident. He is also a Senior Fellow at the Pepperdine University School of Public Policy.