Spread Between Seasonally And Non-Seasonally Adjusted Insured Unemployment Surges To Multi-Decade High
The notable fudge factor in today's initial claims report had nothing to do with EUCs or continuing claims (people are now rolling off both faster than ever), but the spread between the Seasonally and Non-Seasonally adjusted insured unemployment rate. As the DOL indicates, the Seasonally Adjusted Ins. Unemployment rate was 4.6%, while the Non-Seasonally Adjusted equivalent came in at 3.5%: a 110 bps spread. The last time the delta was so wide was back in January 1992!
Also curiously, the DOL reported that while the SA number increased by a "mere" 11,000, the NSA number went up by a whopping 156,165. Also notable, the while the combined SA unemployment on January 2 was 4.6 million, the NSA equivalent was 6 million: a 714,924 delta from the December 26 week alone!
And here is a chart indicating how wide the spread has gone in the past year.
While the SA-NSA differential is nothing new, and as the charts above indicate it is a recurring feature as the DOL attempts to normalize for seasonal data, the likelihood now is that the SA number is substantially underestimating the true picture in term of job eliminations. With a major downward adjustment coming from the BLS in February, and especially if those discouraged from working attempt at rejoining the work force, we expect the bottom to fall off from the employment market, precisely at a time when the political tensions ahead of mid-term elections hit fever pitch.