For a while the liberals were celebrating. Earlier this morning, the Department of Labor reported that initial jobless claims plunged to 339K from 369K a week ago. Economists were expecting this week to be the same as last.
Immediately the tweets mocking Jack Welch were released by the progressives. After all today's numbers seemed to back up the big drop in unemployment which Welch said was impossible. But not so fast progressive piranhas, even the labor department is warning today's numbers are on the funky side.
According to Bloomberg:
One state accounted for most of the plunge in claims, a Labor Department spokesman said as the data were issued to the press.And from the WSJ said:
"However, the report may not be as positive as the sharp drop indicates. A Labor Department economist said one large state didn't report additional quarterly figures as expected, accounting for a substantial part of the decrease."CNBC's Kelly Evans is reported that the discrepancy is that "one state did not process & report its typical seasonal workload" and that a rebound next week is likely.
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.While the labor department has no way of telling which state screwed up the numbers something in the back of my mind keeps whispering Illinois, Illinois.
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.