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Watch out: Weekly data on unemployment filings are about to get even more confusing.
The Labor Department has announced that it is changing the way it adjusts jobless claims figures for seasonal patterns. Economists say the change will make the data more accurate, but it will also complicate comparisons over time.
The seasonal adjustment process is meant to account for regular, predictable patterns in layoffs. Hundreds of thousands of seasonal retail workers are let go after the holidays each year, for example.
The surge of layoffs during the pandemic, however, threw off seasonal patterns and led the seasonal adjustment process to exaggerate week-to-week changes.
Until now, seasonal adjustments have taken past patterns into account by offsetting the total by the percentage by which claims ordinarily rose or fell that week. The new methodology will base the adjustments on the number of people who filed claims in a given week in prior years.
Heidi Shierholz, a former chief economist for the Labor Department under President Barack Obama and now a senior economist at the left-leaning Economic Policy Institute, said the change in methodology should make the seasonally adjusted numbers more accurate.
The Labor Department does not plan to revise its estimates for previous weeks, however. That means that the next set of numbers, which will be released on Thursday, will not be directly comparable to earlier data. The report will almost certainly show a big drop in seasonally adjusted claims, but that will reflect the change in methodology, not a real-world decline in layoffs.
As a result, in our coverage, The Times plans to emphasize unadjusted figures, which will not be affected by the change in methodology and are comparable over time. We will continue to use the unadjusted figures at least until weekly claims fall to a level where normal seasonal patterns become relevant again.
None of this will change the big picture. Both adjusted and unadjusted data showed a huge spike in unemployment filings beginning in March, and a much more gradual decline since then. Both show progress stalling in recent weeks.
“The broad brush strokes are the same no matter what numbers you use here,” Ms. Shierholz said.
Article source: https://www.nytimes.com/live/2020/09/01/business/stock-market-today-coronavirus