Continuing jobless claims

What Is Continuing Jobless Claims?

Continuing jobless claims refer to the number of individuals who have already filed an initial claim for unemployment benefits and are continuing to receive those benefits for subsequent weeks. This statistic is a key element within the broader field of macroeconomic analysis and serves as an important economic indicator of the overall health of the labor market. While initial jobless claims capture new layoffs, continuing jobless claims provide insight into the duration of unemployment and the ongoing demand for unemployment benefits. The U.S. Department of Labor releases this data weekly, offering a timely snapshot of persistent joblessness.

History and Origin

The concept of unemployment insurance and subsequently, the tracking of continuing jobless claims, has its roots in the early 20th century. While some private and union-based unemployment schemes existed prior, widespread public programs in the United States gained traction following the Great Depression. The federal Social Security Act of 1935 marked a pivotal moment, establishing a cooperative federal-state system for unemployment insurance, which effectively encouraged individual states to create their own programs⁹, ¹⁰, ¹¹. This legislative framework laid the foundation for the collection and reporting of data on those receiving ongoing support, leading to the regular tracking of continuing jobless claims as a measure of economic distress and recovery.

Key Takeaways

• Continuing jobless claims measure the number of people who have filed an initial jobless claim and are still receiving unemployment benefits.
• This data provides insight into the duration of unemployment, differentiating from initial claims which track new applications.
• The U.S. Department of Labor collects and releases continuing jobless claims data weekly.
• While not a leading indicator, trends in continuing jobless claims offer valuable information about the persistence of joblessness and the underlying strength of the economic expansion or recession.⁸

Formula and Calculation

Continuing jobless claims do not involve a specific financial formula in the typical sense of calculating a financial metric like return on investment or market capitalization. Instead, the figure is a direct count. It represents the aggregate number of individuals who meet the following criteria in a given week:

• They have already filed an initial claim for unemployment benefits.
• They have experienced at least one week of unemployment since their initial claim.
• They are currently covered by and receiving unemployment insurance payments from their state.

The U.S. Department of Labor compiles these numbers from state-level unemployment agencies. No complex mathematical formula is applied; it is a straightforward tabulation of eligible individuals receiving benefits.

Interpreting Continuing Jobless Claims

Interpreting continuing jobless claims involves observing their trend over time rather than focusing on a single weekly figure. A sustained increase in continuing jobless claims suggests that unemployed individuals are struggling to find new employment, which can signal a weakening business cycle and potential challenges for overall consumer spending. Conversely, a consistent decline indicates that more unemployed individuals are successfully transitioning back into the workforce, reflecting an improving job market.

Economists often analyze the four-week moving average of continuing jobless claims to smooth out weekly volatility and identify clearer trends. This smoothed data provides a more reliable signal about the underlying trajectory of unemployment duration. A low and declining number of continuing jobless claims is generally seen as a positive sign for economic health, suggesting that layoffs are temporary and re-employment is swift.

Hypothetical Example

Consider a hypothetical scenario in the state of Floridia. In a particular week, 10,000 people file for initial jobless claims due to a factory closure. In the subsequent weeks, analysts track these individuals.

• Week 1 after initial claim: Out of the original 10,000, 9,500 are still unemployed and continue to claim benefits. The continuing jobless claims figure for this group contributes 9,500 to the state's total.
• Week 2 after initial claim: Suppose 500 of the original 9,500 find new jobs. Now, 9,000 of that original cohort are still claiming benefits. This number continues to be tracked as part of the overall continuing jobless claims.
• Ongoing: Each week, the state's total continuing jobless claims would aggregate all individuals across various cohorts who are still receiving benefits, reflecting how many people remain unemployed and reliant on unemployment insurance. If other companies also lay off workers, or if people from prior weeks' initial claims also continue to claim, the total number of continuing jobless claims would rise, impacting perceptions of the Gross Domestic Product (GDP) outlook.

Practical Applications

Continuing jobless claims are a critical data point for economists, policymakers, and investors, offering insights into the persistence of unemployment. Policymakers, including the Federal Reserve, closely monitor these figures alongside other labor market indicators to formulate monetary policy and assess the need for fiscal policy interventions⁷. For instance, a persistent rise in continuing jobless claims during an economic downturn might signal the need for extended unemployment benefits or other stimulus measures to support aggregate demand.

In financial markets, while initial jobless claims often garner more immediate attention due to their "new" nature, continuing jobless claims provide a deeper understanding of the labor market's underlying conditions. They can influence market sentiment regarding economic growth, corporate earnings, and even inflation expectations. For example, during the COVID-19 pandemic, analyzing continuing jobless claims became crucial for understanding the true extent of joblessness, even as initial claims provided an upper bound on job separations⁶. This highlighted the importance of interpreting these claims carefully to gauge the actual economic impact.

Limitations and Criticisms

Despite their utility as a labor market indicator, continuing jobless claims have several limitations that can affect their accuracy and interpretation. One significant criticism is that the data only counts individuals who are eligible for and actively receiving unemployment benefits. This means the figure excludes several categories of unemployed persons, such as those who have exhausted their benefits, those who are self-employed, individuals who were fired for cause or quit voluntarily, and new entrants or re-entrants to the labor force who have not yet found a job⁴, ⁵. Consequently, the reported number of continuing jobless claims may understate the true level of unemployment or job market distress.

Furthermore, temporary factors, administrative backlogs, or changes in state-level eligibility requirements can introduce noise and distortions into the weekly data. During periods of significant economic upheaval, like the onset of the COVID-19 pandemic, interpreting these claims became particularly complex due to "sweeping institutional changes, widespread backlogs, and irregularities in reported numbers," potentially overstating or obscuring actual job losses³. Therefore, it is important to consider continuing jobless claims in conjunction with other economic data to form a comprehensive view of the labor market and its implications for economic factors like inflation and interest rates.

Continuing Jobless Claims vs. Initial Jobless Claims

Continuing jobless claims and initial jobless claims are both reported weekly by the U.S. Department of Labor, but they track different aspects of unemployment. The key distinction lies in the timing and nature of the unemployment claim:

While initial claims provide a real-time gauge of new job losses, continuing jobless claims offer insight into how quickly those who have lost their jobs are able to find new employment. A high number of initial claims followed by a stubbornly high number of continuing jobless claims can signal a more challenging and prolonged economic downturn.

FAQs

How often are continuing jobless claims reported?

Continuing jobless claims are reported weekly by the U.S. Department of Labor, typically on Thursday mornings, providing a high-frequency look at ongoing unemployment.

What do continuing jobless claims indicate about the economy?

Continuing jobless claims indicate the duration and persistence of unemployment. A rising trend suggests that unemployed individuals are struggling to find new jobs, which can signal a weakening labor market and broader economic challenges. Conversely, a declining trend is a positive sign for economic recovery.

Why are continuing jobless claims often less market-moving than initial jobless claims?

Continuing jobless claims are generally less market-moving than initial jobless claims because they reflect ongoing unemployment rather than new job losses. The initial claims provide fresher, more immediate information about the pace of layoffs, which tends to have a more direct impact on investor sentiment regarding the immediate economic outlook.

Do continuing jobless claims include all unemployed individuals?

No, continuing jobless claims only count individuals who are eligible for and currently receiving unemployment insurance benefits. This excludes those who have exhausted their benefits, new workforce entrants, or individuals who are not eligible for state-specific unemployment programs.¹, ²