Are automaker woes skewing unemployment figures?

In the summer, the Big 3 usually idle factories and lay off workers. But this year, they're ahead of schedule


Andrew Leonard
July 9, 2009 7:10PM (UTC)

For the first time all year, the number of new initial claims for unemployment benefits fell under the 600,000 mark, dropping by a substantial 52,000 from last week's revised number of 617,000. The four-week moving average also fell by 10,000, providing further, and seemingly definitive, evidence that we are past the peak in new jobless claims reached some 13 weeks ago.

The total number of continuing claims still hiked up, to 6,724,000, which is bad, but the new jobless claim numbers would seem to be unambiguously good news, one of the few "green shoots" that haven't withered away during a harsh summer.

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However, every news report I've read on the new numbers is quick to temper any enthusiasm by noting that this time of year the numbers are typically volatile and uncertain.

From the Wall Street Journal:

Based on historical patterns, government statisticians expect big increases in jobless claims as automobile companies and other manufacturers temporarily idle plants, and adjust their seasonal adjustments accordingly.

But since "Chrysler and GM had plant shut downs over the past few months due to their bankruptcies and just restarted them," writes Peter Boockvar at the Big Picture, "we aren't going to see the seasonal July shutdowns, thus the claims data was skewed lower artificially."

Fair enough. But if the the new claims are skewed lower artificially because of GM and Chrysler's woes, doesn't that mean that the bad numbers for the last couple of months were skewed higher "artificially"? And could that be a reason why the number of new claims hasn't been falling as quickly as historical patterns would suggest should happen after a peak has been reached?


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Great Recession How The World Works Unemployment U.s. Economy

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