Yesterday's post on documented Treasury outlays for unemployment insurance benefits, spurred various questions which we wanted to shed some light on. To recap: the gist of the post was that the divergence of average monthly premia paid by the Federal government, superimposed with actual changes in the population of those collecting unemployment insurance (per the government's data) has diverged dramatically. The key premise in the analysis is that average monthly "allowance" paycheck has been relatively flat, and while there have been marginal changes ($25 dollar increases to a fraction of the population eligible for such increase), the core of the problem is captured by the chart below. As one can see, the average monthly payment since the beginning of Fiscal 2008 has been $1,207. If one excludes the divergent period since March of 2009, the average was just $1,109 per month. Yet the most recent data indicates that in December, according to the government's data, the actual outlay came down to $1,536, 21% higher to the total average, and 28% to the narrower average payment of $1,109. Is the government engaged in another, stealth stimulus by gradually padding unemployment insurance benefits? After all the money printer is on, and with banks not lending, what easier way to get the money straight to the (unemployed) population.
The divergence becomes even starker, when presented on a year-over-year basis: in December the YoY variation is a stunning 48%. We apologize, but we must have missed the math class where a $25 increase in the weekly allowance of roughly $300, translates into a nearly 50% in payments from a year prior.
Once again - we merely present the facts. Their interpretation is open, as we have not formally queried the Treasury on this divergence. Yet, two themes are apparent. As we indicated before the math is simple: we know how much money is being spent on unemployment insurance and how many people are collecting said money. There are two options: those on benefits have stealthily seen their paycheck increase by 48% compared to a year ago (all else equal), or, more realistically (especially if you discuss this topic with people on insurance benefits, who will tell you that very few of them have actually seen any improvement in their weekly Uncle Sam "payroll"), either a shadow group of "unemployed" is getting more and more payments which is, as of yet, unaccounted for in the DOL database, or, and most dangerously, the Federal Government is somehow compensating for declines in State budget funding for insurance payments. Zero Hedge will perform a state by state analysis of insurance outlays next to control for this particular variable. However, we do believe that there is substantial doubt as to just what is really happening in this most critical of data series for the viability of the economy, that Tim Geithner's office should publicly address some of the presented observations. After all, the money he is being so generously unaccountable with, is money that belongs to each and every one of us.