Jobs

Why the Drop in Weekly Jobless Claims Is Flawed

When we saw that the Labor Department reported a 30,000 drop in weekly jobless claims, the initial thought was that more suspect calculations may be involved. Then the thought that perhaps things may have improved so fast at the end…

By Jon C. Ogg
Published October 11, 2012, 9:53am ET · 1 min read

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When we saw that the Labor Department reported a 30,000 drop in weekly jobless claims, the initial thought was that more suspect calculations may be involved. Then the thought that perhaps things may have improved so fast at the end of September that it skewed the data higher. As it turns out, the big drop in the weekly jobless claims does in fact have a huge asterisk attached to it.

CNBC and Dow Jones have both confirmed that this latest weekly jobless claims report was missing data from one large state. Bloomberg noted that the Labor Department spokesperson said that one state accounted for most of the plunge in claims.

Last week’s unemployment rate drop from 8.1% in August to 7.8% in September drew some sharp criticism from many market pundits. It became a very political issue and accusations about the reliability and accountability were thrown out there by many outlets.

We will have to wait a week to see what the revision will be, but if it includes the data from one more large state then chances are high that the revision higher will be by more of a jump than the traditional higher revisions we see each week.

JON C. OGG

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Jon C. Ogg

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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