Thursday, January 12, 2012

Seasonality and initial unemployment claims

Weekly initial unemployment claims were released today and they showed an increase to 399,000, countering the recent downward trend.  Details can be found at the DOL

I would not make much of the current gyrations, up and down. As the graph below shows, right now we are at the highest seasonal peak of layoffs/firings.  Each year you can see a massive increase in initial claims just around the new year. This makes estimating the trend very difficult.  (Translation, put very large error bars on data around the new year)

I wonder how many financial models out there reduce the weight of this data (and other series) when they are less accurate?  

Here's the two data series on a year over year basis.  While initial claims are still declining the rate of decline appears to have leveled off. 

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