Sluggish Improvement in Unemployment Claims Distorted by California

Mish

Unemployment claims continue to show modest improvement but California stats are distorted by fraud.

Initial Claims

There has very slight slight improvement in initial claims for six weeks.

For the weeks ending August 29, September 5, September 12, September 17, September 26, and October 3 there were 884,000, 893,000, 866,000, 873,000, 849,000, and 840,000 seasonally-adjusted claims respectively according to the Department of Labor.

Given margins of error on seasonally adjusted data there has been essentially no progress for six weeks.

Continued Claims

Continued State Unemployment Claims in 2020 October 7 Report

Continued claims lag initial claims by a week.

For the weeks ending August 29, September 5, September 17, and September 26, there were 13,554,000, 12,747,000, 12,747,000, 11,979,000, and 10,976,000 seasonally-adjusted claims respectively.

These numbers are continually revised.

The downward slope (pace of progress) has not changed since May. 

It's continued state claims that determine the official unemployment rate, not that anyone of intelligence believes the BLS number.

All Continued Claims

All Continued Claims in 2020 Oct 7 Report

All Continued Claims are not seasonally adjusted. They also lag initial claims by two weeks and continued claims by a week.

The total for the latest week is 25.5million. This should realistically feed the U-6 unemployment rate but it doesn't.

California Fraud

Bloomberg Econoday has this interesting blurb regarding California.

California is now offline when it comes to claims data as it scrambles to limit unemployment fraud. With the weekly estimate for the US's largest state now frozen at a prior level of more than 260,000, forecasters see total initial claims easing slightly but not substantially to 819,000 in the October 3 week. This would compare with 837,000 in the prior week that saw only a small decline.

California unemployment fraud, who couldda possibly thunk that? 

Does fraud stop in California or is it pervasive?

Mish

Comments (20)
IA Hawkeye in SoCal
IA Hawkeye in SoCal

I will admit, I don't know what to make of the current state of things in SoCal. On the surface, things look almost as they did back in February. The roads are packed again, Costco and Target and Home Depot are always busy, and I live around a ton of warehouses that have parking lots full of employees. I went to Newport Beach last weekend and it was quite busy.

Underneath that I can't tell you what is happening. I wish I knew more restaurant owners so I could ask them how their till looks. Places like Dave N Busters haven't reopened yet, and businesses that feed off tourism like outside Disneyland are hurting badly.

Normal suburban areas like downtown La Verne, Claremont, Upland, Redlands and Riverside all have areas with ample space for outdoor dining and they seem to be doing ok. All the little antique stores and craft breweries are open, but again I can't say what their revenue looks like.

My home value has increased 16% this year alone. A new small subdivision up the street from me sold all their model homes, and they are currently constructing the rest of the project. And as always lately, they can't seem to build large warehouses fast enough. They are tearing down old properties and using every inch they can find.

In the South Bay, cities like El Segundo are hiring like crazy in Aerospace, they are busting at the seams with space projects. Adjacent "Silicon Beach" (Playa Del Ray) has been filling up with the big tech companies for the last 10 years, they are still going strong.

These are just some musings from current SoCal, 10/9/2020.

PreCambrian
PreCambrian

I know a temporary hire for the California EDD which processes unemployment claims. She says that approximately half of all claims that she handles don't "check out" and meet basic eligibility requirements such as SSN, 1099, W-2, etc. and have to be referred to the more experienced full time state employees. Hopefully the fraudulent claims stop there.

Rbm
Rbm

Ca unemployment has not been accepting new claims because they are upgrading their computer systems from cobalt. And also fraud.

RonJ
RonJ

"Two days after Disney announced some 28,000 layoffs in its U.S. parks business, chairman Bob Iger has resigned from California Gov. Gavin Newsom’s task force on the state’s economic recovery."

Governor Newsom still refuses to allow Disneyland to reopen, even under reduced capacity. Recently, the mayor of Anaheim begged Newsom to do something, as it is crushing the city.

Meanwhile, "Over 7,000 Scientists, Doctors Call For COVID Herd Immunity, End To Lockdowns" sifning onto the Great Barrington Declaration.

"Oxford University professor Dr Sunetra Gupta was one of the authors of the open letter that was sent with the petition, along with Harvard University’s Dr Martin Kulldorff and Stanford’s Dr Jay Bhattacharya."

KidHorn
KidHorn

From looking at the data, we've lost about 22 million jobs. Roughly 20% of all jobs. I know things are bad, but that number seems too high.

Casual_Observer2020
Casual_Observer2020

Fraud is rampant. This is America. The President has no problem with fraud or scamming anyone he possibly can so why should we.

BillinCA
BillinCA

It appears as if a ton of systematic fraud is happening. I agree with Mish, it can't just be happening in California. California is already ill-equiped to handle this. Hell, they can't even handle a DMV title replacement for my vehicle.
What about states with less sophisticated ways of tracking this?

"EDD fraud involves stolen identities, dark web, international crime":

"EDD freezes nearly 700K claims in attempt to combat fraud":

"Massive Allegations Of Fraud Have Forced California To Temporarily Stop Paying New Unemployment Benefit Claims":