Fraudulent Texas unemployment filings caused national spike
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A massive spike in jobless claims on Thursday heightened fears of a swift labor market deterioration — but it turns out many of those claims were fake.
Why it matters: The big jump, which took national claims to a four-year high and jolted financial markets, was a result of attempted fraudulent unemployment filings in Texas.
Catch up quick: Minutes after the report, economists flagged that the overall spike in weekly claims was a result of an unusual surge in Texas — a quirk some attributed to holiday effects or the state's flood disaster claims program.
- But now the state's labor office, which reports the data to the national Labor Department, said it was a direct result of fraudulent attempts to collect unemployment benefits.
The intrigue: "The increase in initial claims for unemployment insurance in the week ending September 6th is directly related to an increased volume of fraudulent claim attempts," a spokesperson for the Texas Workforce Commission said in a statement.
- "Since Labor Day, we've observed an uptick in identity (ID) fraud claim attempts aimed at exploiting the unemployment insurance system," the spokesperson added.
Of note: "The Department of Labor remains committed to combatting fraud in the unemployment insurance system, and these questions highlight why it's critical to strengthen program integrity and safeguard Americans' hard-earned tax dollars," a spokesperson said.
- The Labor Department did not respond to questions about whether Texas communicated that the fraud issue inflated its claims — and if so, why it was not flagged in the public release.
By the numbers: The agency said yesterday that nationwide initial claims were 263,000, an increase of 27,000 — the most since October 2021.
- On an unadjusted basis, initial claims under state programs totaled 204,000, up 4% from the previous week.
- Texas accounted for 15% of that, with 32,000 claims — up by 15,000 in a single week.
The bottom line: "The key message here is that the spike, as we had thought, doesn't tell us anything about the economy," J.P.Morgan economist Abiel Reinhart, who confirmed the issue from Texas officials, wrote in a note.
- "Ignoring this increase leaves claims running in the low 240k range, which is somewhat elevated from the same week in prior years, though not dramatically so."
