One of the oddities that seemed out of whack in this morning's weekly Unemployment Claims update was the explanation for the spike in this week's receipents of government generosity: apparently it had to do with the BLS handing out weekly benefits checks to striking Verizon workers. We will repeat the key word from that sentence because it bears repeating: "striking." Now, we may be wrong here, but if one is striking, one is not u-n-e-m-p-l-o-y-e-d, and hence the US government should probably not be using taxpayer money to double pay such individuals who have singlehandedly decided to forgo pay in return for making a labor statement. Otherwise, it kinda kills the whole "sacrifice" thing. And, lo and behold, as it turns out, we are not wrong. From JP Morgan: "Striking workers are generally not eligible to receive unemployment insurance benefits, but it looks like about half of the total amount of striking workers filed claims over these two weeks to formally determine their eligibility." Generally... except when the administration is willing to hand out money to anything and everything with a pulse. After all, there is that massive $2.2 trillion Bank of America balance sheet that has to be funded. And with direct reserve funding already failed, as per QE1 and 2, the only other possible way is via deposit increases. Alas, by the time this money could possibly be saved, it has been spent 5 times, the other 4 hitting Bank of America's bad credit card receivables department.
From JP Morgan:
Initial claims increase during week ending August 20, with or without striking workers
Initial claims for the week ending August 20 increased 5,000 to 417,000 from a figure for the prior week that was revised up. The Department of Labor noted that the Verizon worker strike generated about 12,500 claims during the week ending August 13 and about 8,500 claims the week ending August 20 (not seasonally adjusted). Striking workers are generally not eligible to receive unemployment insurance benefits, but it looks like about half of the total amount of striking workers filed claims over these two weeks to formally determine their eligibility. If we remove these striking workers from the claims data to give us a better indication of labor market conditions, claims would have increased about 10,000 to 409,000 between the weeks ending August 13 and August 20; the four-week moving average for claims during these weeks would be around 400,000, showing improvement relative to the July labor market survey week when the four-week moving average was 422,000.
Continuing claims for the week ending August 13 declined 80,000 to 3.641mn. Continuing claims have been basically flat since the end of March, but this was the largest single-week drop reported since mid-February. The insured unemployment rate for the week ending August 13 ticked down from 3.0% to 2.9%, equaling the low for the recovery to date.