Told ya! Unemployment claims spike after Thanksgiving

You might recall me saying the following last week.

The upshot of that is if we see the same amount of unemployment claims in real life for this week as we did for the 1st week of December in 2018 (aka, not seasonally adjusted), then we would see unemployment claims jump by 50,000 in the next report.

And this morning, we got the new unemployment claim data from the Department of Labor.

The number of Americans filing for their first week of unemployment benefits suddenly jumped last week to the highest level in more than two years.

The number of initial claims rose to 252,000 in the week ending December 7, an increase of 49,000 from the number of claims filed the week before, the Labor Department said Thursday.

That's higher than the 213,000 claims economists had expected and marks the highest level since the week ending September 30, 2017.

Liz Ann Sonders, Charles Schwab Chief Investment Strategist, called it "a somewhat-uncomfortable pop up" in a tweet, but said it was "too soon to declare it an uptrend."

BWAHAHAHAHA!!!

To continue with my point from last week, there has been little difference in the actual number of unemployment claims over the week before, of, and after Thanksgiving. But the seasonally-adjusted numbers have been very different.

US unemployment claims
Not Seasonally Adjusted
Week before Thanx 2018 226,576
Week before Thanx 2019 252,413 (+25,837)

Week of Thanx 2018 218,658
Week of Thanx 2019 216,812 (-1,846)

Week after Thanx 2018 317,936
Week after Thanx 2019 317,509 (-427)

Seasonally Adjusted
Week before Thanx 2018 224,000
Week before Thanx 2019 213,000 (-11,000)

Week of Thanx 2018 234,000
Week of Thanx 2019 203,000 (-31,000)

Week after Thanx 2018 229,000
Week after Thanx 2019 252,000 (+23,000)

Why? Because of the Department of Labor's seasonal adjustment factor, which didn't seem to take into account the fact that Thanksgiving came late this year. December usually has more unemployment claims that most months of the year as the weather turns cold, but early December 2018 had a higher deflation factor from the DOL than we had in 2019, which reversed a high amount of deflation in 2019 at the end of November.

So that's how we get the same number of real-life unemployment claims in 2018 and 2019, but the seasonally-adjusted numbers reported in the newspaper make it seem like there's been a wide variety. And it amazes me that economists on Wall Street fell for it.

The unemployment claims are still historically low, just not as low as media was portraying it as at the time. And they'll likely be "elevated" next week, before evening out over the rest of December. But it was pretty damn funny to see people get shocked by the increase that they should have seen coming a mile away.