What the Increase in Unemployment Claims Really Means
July 23, 2020
Today has been awash in headlines declaring that more people filed for unemployment last week than the week before, a worrying reversal in the downward trend and a potential sign of the economic recovery stalling out as virus cases increase.
While these headlines are not wrong, they are missing context. Weekly unemployment claims are seasonally adjusted. To account for the normal ebb and flow of business operations, the number of claims is altered slightly. Without the seasonal alteration, and with the addition of federal claims under the CARES Act, there were 2.35 million claims for unemployment assistance last week. This is down from a raw total of 2.45 million the week before.
Though the numbers do not show an increase in claims, they do show that the level of new claims remains stubbornly, persistently high. There remains the potential for a shift in momentum, but it has not arrived yet.