The Number of New Jobless Benefit Claims for the First Week of 2012

How many people filed for new unemployment insurance benefits in the first week of January 2012?

We'll find out the answer to that question later this morning, but in the meantime, we can make a pretty good guess using our updated forecast chart for the number of seasonally-adjusted initial unemployment insurance claims filed each week!

Assuming the trend established since 9 April 2011 remains intact, and that the variation of individual data points with respect to that mean trend line follows a normal, bell-curve kind of distribution, we can give the following odds that the number of seasonally-adjusted new jobless claims for the week ending 7 January 2012 will fall within the indicated ranges:

• There is a 50% chance the number will be above 384,593. Likewise, there is a 50% chance the number will be below 384,593.


• There is a 68.3% chance that the number will be between 372,552 and 396,634.
  
  
• There is a 95.4% chance that the number will be between 360,510 and 408,676.
  
  
• There is a 99.7% chance that the number will be between 348,469 and 420,717.
  
  

Using our statistical control chart-inspired methodology, should the number of seasonally-adjusted initital unemployment insurance claim filings for the week ending 7 January 2012 come in either below 348,469 or above 420,717, it would be an indication that the trend established since 9 April 2011 is potentially breaking down.

As you can see though, it's been going pretty strongly for nearly eight full months now. If it continues through the end of March 2012, it will be very unlikely that we'll see the number of new jobless claims climb above the 400,000 mark, where it spent much of 2011.

In looking deeper at the chart, we see some indications that the established trend may indeed be breaking down. Here, in going from 17 September 2011 to 24 September 2011 and then again from 26 November 2011 to 10 December 2011, we see that the volatility in the number of new unemployment benefit claim filings being recorded each week has increased.

If that continues, the big unknown for us right now is that we don't know yet which way the numbers will break!

Update (12 January 2012, 9:36 AM: Here's the updated chart, incorporating the data from today's report:

Today's new jobless claim value of 399,000 was just outside our 68.3% probability range. Given the BLS' track record in under-reporting the actual number of new jobless claims each week, we can reasonably expect that the figure for the week ending 7 January 2012 will be revised upward in the next report to be 400,000 or higher.

Today's number also underscores the increasing level of volatility in the data - when the current trend was establishing itself, it was characterized by relatively small changes in the number of new jobless claims being filed from week to week.

Today new data marks the fourth time in the last six weeks in which the size of the change in the reported numbers from week to week has exceeded one standard deviation. That's specifically what we're looking at when we suggest that the established trend may be beginning to break down.

Only Adults Need Apply....

The big news on the jobs front is that the unemployment rate for December 2012 fell to its lowest rate since early 2009, reaching 8.5% following a massive revision in U.S. employment data covering the period from January 2007 through December 2011.

But even with that revised data, and the apparent surge in job growth for the month of December, both teens (Age 16-19) and young adults (Age 20-24) saw no gains for the final month of 2011 and, in fact, saw their numbers in the U.S. workforce decline.

All of the net gain in the number of employed Americans was concentrated among individuals Age 25 or older in December 2011.

Worse, if we look at the total number of jobs lost by age group since total employment peaked in the United States in November 2007, we find that American teens have seen little-to-no improvement in their number of employed since December 2009 when, by all appearances from the revised jobs data, the maximum number of jobs lost in the U.S, economy occurred.

By comparison, both young adults (Age 20-24) and adults (Age 25 and older) have seen their numbers increase in the U.S. workforce during that time.

This lack of improvement in the employment situation for U.S. teenagers over the last two years very likely explains President Obama's new initiative to get corporations, non-profits and government agencies to hire 250,000 teens for summer jobs in 2012.

Because obviously, none of the President's previous pivots to jobs ever worked for helping American teens get work....

A Four Year Milestone for U.S. Jobs

Four years ago, the number of employed Americans peaked at 146,584,000 in November 2007, just ahead of the U.S. economy itself peaking in December 2007, which marked the starting point for the nation's most recent economic recession.

Through November 2011, four years later, the number of employed Americans has fallen to 140,480,000. Just over six million fewer Americans are working today than were four years ago.

Overall, the jobs situation in November 2011 brightened for most Americans from October 2011, especially for those Age 25 and older, whose numbers in the U.S. workforce grew by 405,000 during the month.

Young adults however were on the losing side of the employment picture however, as 145,000 fewer individuals between the ages of 20 and 24 were counted as being employed than were in October 2011. That's disappointing because young adults had been seeing the largest gains in the number of employed in each month since July 2011, at least, until now.

Meanwhile, the employment situation of American teens continued to improve very slowly, as only 18,000 additional individuals between the ages of 16 and 19 were counted as having jobs in November 2011.

Today, the jobs lost by teens account for nearly 1 in 4 of all jobs lost since the United States entered into recession in December 2007. That's remarkable because teens represented just 3.1% of the entire U.S. workforce in November 2011. Four years ago, teens made up just 4.0% of the 6,004,000 member larger U.S. workforce.

Continuing to break down the data, young adults today represent 9.4% of the U.S. workforce, while accounting for 13.1% of the total number of jobs lost in the U.S. economy since November 2007.

Adults Age 25 or older make up the remaining 87.5% of today's U.S. workforce. Through November 2011, these individuals account for 62.0% of all the jobs that have been lost in the last four years.

New Jobless Claims: Still On Track

Today's news that the number of initial claims for unemployment insurance benefits being filed for the week ending 26 November 2011 ticked back up over the 400,000 mark is right on track with the prediction we published over a month ago.

Here's that prediction:

... since that slowly downward trending line is currently projected to stay above the 400,000 level through the end of 2011, we can therefore expect that there is over a 50% probability that the number of new, seasonally adjusted initial unemployment claims will be above the 400,000 mark through the end of the year.

In fact, what we can expect as we go forward in time is that we'll see an increasing number of times in the weeks ahead where the number of new jobless benefit claim filings will fall below the 400,000 mark, as the number of layoffs from U.S. employers each week continues to decline gradually.

Lo and behold, that's pretty much exactly what has happened so far in the time between 21 October 2011 and today, as shown in our chart below, which adjusts the trend line slightly:

For the six most recent observations of the number of new jobless claims, which cover the period of time since we made our prediction, three have been at or above the 400,000 mark, while three have been under.

We also see that the mean trend line has shifted to be slightly steeper, which suggests that the number of initial unemployment insurance claim filings each week will be more likely to fall under the 400,000 mark in the weeks ahead.

Meanwhile, Bloomberg reports that the uptick in new jobless claims is "unexpected":

Jobless claims climbed by 6,000 to 402,000 in the week ended Nov. 26 that included the Thanksgiving holiday, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg News survey called for a drop to 390,000. The number of people on unemployment benefit rolls and those getting extended payments increased.

Whoops! There's 43 economists whose forecasting ability is now in doubt, which is a shame because the number of new jobless claims filed each week is perhaps the easiest of all economic data to forecast while its basic trend is intact!

And at present, it appears that the current trend for weekly new jobless claims remains well in force.