Unemployment Claims: Running Out Of People We Can Fire

The report this morning is being trumpeted as “good news”;

In the week ending February 11, the advance figure for   seasonally adjusted initial claims was 348,000, a decrease of 13,000   from the previous week’s revised figure of 361,000. The 4-week moving average   was 365,250, a decrease of 1,750 from the previous week’s revised average of  367,000.

Yeah, ok.  CNBC was all over this claiming that this was going to lead to a +250k employment report.

The truth is likely found in the labor participation rate, which has an entirely different story to tell.  Specifically, we’re running out of people to fire, and those who have been fired and can’t find work are giving up, so they don’t count.

This is “good” from a statistical and optics point of view, but it’s horrifyingly bad in reality, because the labor participation rate is what determines the fiscal sustainability of government spending.

Simply put, you can’t effectively tax people that aren’t working, as you’re just confiscating what you gave them — it is functionally identical to taking a $20 from your left pocket, putting it into your right pocket, then claiming you “gained” $20.


The big table at the bottom, incidentally, was +18k, basically stable.

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