Unadjusted Year Over Year: Labor Department Initial Jobless Claims Up 35%

Here's the scoop on the Labor Department's weekly initial jobs claims report:

• Associated Press Headline And Lead: "New jobless claims rise more than expected... The number of newly laid-off workers filing first-time claims for jobless benefits rose last week, the government said, though the increase was mostly due to seasonal distortions."
• Labor Department News Release: click here. 
• Key Numbers: "The advance number of actual initial claims under state programs, unadjusted, totaled 507,464 in the week ending July 25, a decrease of 78,111 from the previous week. There were 376,123 initial claims in the comparable week in 2008."
• My Spreadsheet (click Download 20090730yoy).

Here's my uneducated interpretation - On the crap detector front, AP quotes the US as saying that rising claims are "mostly due to seasonal distortions". Looking at the fine print of the data, on this week (next to last in July) from 2000 to 2008 the seasonally adjusted number fell (usually around 5,000 jobs) in every year and yet this week it rose 25,000 jobs! And we are supposed to think that this is an anomaly due to seasonal distortions!

Yes, there is a lot of seasonality here. Look back at previous years the seasonality indicates falling absolute unadjusted initial claims at this time of year and then staying low until late September. The next couple of weeks will be telling regarding how low this year's seasonal bottom will get. The unadjusted number is still way over the roughly 332K value for end of July 2001 when the previous recession was bottoming and the 338K value in 2002 when the stock market bottomed. I think the outlook is for continued economic contraction and increasing unemployment based on this data. 

Here's a chart of the initial jobless claims since I started gathering them. The diamond dark blue line is the one that I think is key and having it fall to 400,000 would point to a bottoming of the downturn. 

Here's a chart of the initial jobless claims for 2000 thru 2002. The stock market bottomed in the previous recession in the summer of 2002. 

MontyHigh, www.worldofwallstreet.com