Unemployment claims showing something lurking?

1. With today's surprisingly disappointing December jobs report (only 74,000 jobs added, after averaging just under 200K a month for 2013 up till then), it leads one to look at whether there is a slowdown afoot, or if it's merely an odd month that will be revised upward with further revisions. My instinct is the latter for now, because few other reports had indicated such a slowdown in job growth (ADP's payroll survey had come out on Wednesday and estimated private sector jobs in December went up 238,000, instead of the 87,000 the BLS had).

But let's take a look at unemployment claims, to see if they might be a tipoff for the December and January jobs numbers. Remember, both of these months often see large numbers of layoffs due to the weather growing colder (and the BLS especially noted that December's awful cold and snow played a role in this bad report), and a higher-or-lower number for these months especially can translate into big seasonally-adjusted changes in job "growth." The last couple of years we have seen year-over-year decreases in weekly jobless claims around 10% nationwide, so let's look at the 6 weeks since the week of Thanksgiving to see if that trend is changing.

Year-over-year change in unemployment claims, U.S.
Week ending Nov. 30 -12.17%
Week ending Dec. 7 -7.59%
Week ending Dec. 14 -3.52%
Week ending Dec. 21 +4.13%
Week ending Dec. 28 -1.14%
Week ending Jan. 4 -0.83%

So it's generally less than a 10% drop. But it's also still decreasing, and January 2013 was a decent month for job growth, with a seasonally-adjusted 164,000 private sector jobs added, and 148,000 overall. So this small sample size indicates that there may be slightly less job growth in January 2014 than in the same month last year, but nothing that would indicate the economy is going into recession or anything like that.

And scaling it down to Wisconsin, we're especially vulnerable to higher unemployment claims this time of year, not only because we get colder than most places, but also because Holiday-related jobs in retail and other sectors go away. It's why unemployment claims in Wisconsin have a typical cycle of peaking in the first week after New Year's, staying high through Winter, dropping through the Summer and Fall, and then going back up as the weather cools.

Wisconsin new unemployment claims by week, 2010-2013



As you can see in that graph, we ended 2013 with new unemployment claims around the same levels as we saw in December 2012, a month that saw a moderate gain of 2,400 jobs overall, and 3,300 in the private sector. The cyclical nature of unemployment claims is what makes the recent delays and lack of processing of unemployment claims at the Department of Workforce Development especially bad. Here's an example of that screw-up.

Ron Youngbluth of Pewaukee said he started calling to see whether he'd be eligible for unemployment after he was laid off from his part-time job as an optometrist in Brookfield on Dec. 6. He estimated he called up to two dozen times in the past month, sometimes several times a day. He got through to the automated system, but never to a person.

"I called them the past at least three weeks, I don't know how many times. I couldn't get ahold of anyone," he told the Public Investigator.

"Sometimes, I got a busy signal. Sometimes, they ask for information and I put my Social Security number in, my pin number. They said, 'We're experiencing peak volumes. We'll attempt to transfer you to an agent.' They said 'all our agents are busy with others. Call back some other time.'...

John Dipko, a spokesman for the Department of Workforce Development, said the department is working to handle the high call volume.

"We have additional staff working the phone lines and putting in extra hours to take calls during this temporary high-volume season, and we expect the situation will improve, especially now that the holiday-related office closures are behind us," he said in an email.

Well, apparently not enough additional staff. And given that more people are laid off this time of year, you'd think they wouldn't have a problem finding people, even in 4.0% unemployment Dane County.

What could be worrying looking ahead is that this was the first year in the last 4 that Wisconsin didn't see a sizable year-over-year drop in unemployment claims, which explains the upward swing past 0% in this graph.

Year-over-year change in unemployment claims, 2009-2013



The times in the last 2 years when year-over-year claims have spiked over 0% have generally coincided with months and time periods that have flat job growth or job losses (such as the Fall of 2012 and March and April of 2013). So if we start 2014 with the lines continuing above 0%, then it becomes likely that Governor Walker slips further and further behind the 250,000 goal of job growth that was made in 2010. It also means the Walker job gap will likely grow, as even with this low December report, November was revised up by 38,000 jobs, which means the private sector Walker jobs gap is now back over 50,000 as of November.



Suppose the only positive in today's bad jobs report if you're Scott Walker is that perhaps the jobs gap you created in Wisconsin will close some in December, even if Wisconsin's own gains are tiny. But it's still a long way to get back toward the U.S. pace for Walker's term, and if the unemployment claim numbers are an indication, it won't be closing that much in the next couple of months, at least.