Tim Duy on new claims data

I recently praised a Tim Duy post on fiscal stimulus, albeit using my usual clumsy wording. This led to an amusing Duy tweet:

Ouch! BTW, my post was at Econlog.

Now Duy has another excellent post, this one discussing the puzzlingly high level of initial new claims for unemployment. Duy quotes from a Bloomberg article (in italics) on problems with new claims data, and then adds some comments:

The report came with the same major caveat as last week: The figures from California, the most populous state, used numbers identical to the previous week because the state temporarily halted acceptance of new applications for two weeks to improve its systems and address a backlog of filings.

We know that the states were completely unprepared for the wave of claims that hit this spring. We don’t know however how deeply that damaged the data. The overwhelmed systems were likely more vulnerable to fraud as well.

What really struck me this week was this red flag from the JOLTS report . . .

How can layoffs and discharges have collapsed to pre-pandemic levels despite the persistently high level of initial claims? 

The post contains lots of interesting graphs, and concludes as follows:

Bottom Line: I think we should be much more skeptical of the initial unemployment claims data. If you switch your analysis to the the layoffs and discharges series, the world looks very different. A lot of the conventional wisdom is tied to the claims data. The claims data lets you view the current environment as a repeat of the last recovery. If the claims data is deeply corrupted, the conventional wisdom is just plain wrong. I keep saying the same thing: This isn’t the 2007-09 recession or the 2009-2020 recovery. It’s something different. 

Men of my generation have trouble expressing their feelings. At the risk of making Duy uncomfortable, I can say that my feelings for him have now moved beyond non-hatred, up to somewhere above neutral but below bromance.

I expect a fast economic recovery after the vaccine is widely available. And if I’m wrong, then I will be very disappointed in the cowardly American people.



11 Responses to “Tim Duy on new claims data”

  1. Gravatar of Todd K Todd K
    9. October 2020 at 04:19

    “Men of my generation have trouble expressing their feelings.”

    You are confusing yourself for a member of the silent generation.

    Boomer men have trouble shutting up about their feelings.

  2. Gravatar of Todd Ramsey Todd Ramsey
    9. October 2020 at 04:53

    In Seattle, Amazon, UPS, Kroger, Safeway, and some construction firms are advertising job openings on the radio.

    In the past, employers only resorted to radio ads in the hot labor markets of the dot com boom and the late 2010s.

    Strangest recession ever.

  3. Gravatar of Student Student
    9. October 2020 at 05:33

    This is a very good post. IMO, CA did not freeze the system due to backlogs, they have a big problem with fraud and it’s not joe the Plummer it’s organized crime and nation states using SSNs of the dark web and setting up fake companies and such. [Note also that under pandemic unemployment assistance program many otherwise inelligbiles are now eligible (those that cant work to care for family, those losing a second part time job, the self employed, etc.)

    What would you all calibrate the claims with under the condition where there is no possible way to thoroughly process the claims yet pay timely. JOLTS is obvious but what else is out there anyone can think of?

  4. Gravatar of Student Student
    9. October 2020 at 05:36

    Also note there is a big lag in filing right now. Many people didn’t know they were eligible back in March April or May and are just not filing… thats gonna make a comparison to jolts difficult.

  5. Gravatar of Christian List Christian List
    9. October 2020 at 06:47

    I don’t hate Tim Duy…


    In the part of Germany where I come from, this is actually the highest form of praise. There is even an idiom which roughly translates to: Not scolding is more than enough praise.

    I think this is part of your European heritage. Similar patterns can be found all over Europe. I can think of parts in Scotland, Scandinavia, Northern Spain, Italy, Eastern Europe, where they tell similar stories, in certain regions.

  6. Gravatar of Michael Rulle Michael Rulle
    9. October 2020 at 06:52

    Re: cowardly American people

    Which party encourages “opening up” and which party encourages “keeping it more closed” I don’t mean Trump or Biden. I mean the states.

  7. Gravatar of ssumner ssumner
    9. October 2020 at 08:40

    Student, Good points.

    Michael, I would hope that both parties favor opening up after a vaccine!

  8. Gravatar of Tacticus Tacticus
    9. October 2020 at 11:26

    Completely unrelated to your post, but a friend reminded me today that there is a freely available source of interest rate swap prices. It has no history, though, so needs to be checked regularly.


  9. Gravatar of ssumner ssumner
    9. October 2020 at 11:39

    Tacticus, Thanks, but I don’t know how to read those prices.

  10. Gravatar of Tacticus Tacticus
    9. October 2020 at 11:55

    The price quoted is simply what one needs to pay/accept. So, the 30 year USD is 1.01450; that’s paying/taking 1.01450% per annum and accepting/receiving the Federal Funds rate for 30 years. (And it’s a once per year payment.)

  11. Gravatar of ssumner ssumner
    9. October 2020 at 13:15

    Thanks. And why is it lower than the 30 year bond yield? Risk? Or different cash flow profile?

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