Posted by Joseph Y. Calhoun, III

Jobless claims fell again last week:

In the week ending July 11, the advance figure for seasonally adjusted initial claims was 522,000, a decrease of 47,000 from the previous week’s revised figure of 569,000. The 4-week moving average was 584,500, a decrease of 22,500 from the previous week’s revised average of 607,000.

The advance seasonally adjusted insured unemployment rate was 4.7 percent for the week ending July 4, a decrease of 0.5 percentage point from the prior week’s revised rate of 5.2 percent.

The advance number for seasonally adjusted insured unemployment during the week ending July 4 was 6,273,000, a decrease of 642,000 from the preceding week’s revised level of 6,915,000. The 4-week moving average was 6,666,750, a decrease of 110,250 from the preceding week’s revised average of 6,777,000.  

While the headline number looks like good news, there are serious questions about the seasonal adjustments. The unadjusted number was a lot higher:

The advance number of actual initial claims under state programs, unadjusted, totaled 667,534 in the week ending July 11, an increase of 86,389 from the previous week. There were 483,981 initial claims in the comparable week in 2008.

The problem is that the seasonal adjustments assume layoffs for normal summer auto production shutdowns. With Chrysler and GM in bankruptcy, a lot of those layoffs already happened, so reducing the numbers now doesn’t make sense. On the other hand, earlier weeks when the layoffs actually happened were reported higher than they would have otherwise. The bottom line is that the claims data is very confused right now, but regardless of the actual number there are a lot of layoffs going on.