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Illustration: Sarah Grillo/Axios

The Department of Labor’s weekly tally of initial claims for unemployment insurance has become an unreliable economic indicator.

Why it matters: Initial claims data has been popular among economists, traders and forecasters because it’s published more frequently than any other major report on the economy.

Driving the news: According to Labor data released Thursday, 411,000 Americans filed initial claims last week. While this was higher than the 380,000 expected, at least one top economist warns there are issues with the data.

What they’re saying: "[F]ilings can be impacted by a range of different factors and we think the data could be particularly noisy now that some states have started reducing the programs available for benefits and more states plan to do this in the coming weeks," wrote JPMorgan economist Daniel Silver on Thursday.

  • On June 12, Alaska, Iowa, Mississippi and Missouri phased out extra benefits that were added in response to the pandemic. Eight more states did the same the following week.
  • According to the new report, Iowa, Mississippi and Missouri reported declines in claims from the prior week, while Alaska saw the number rise.
  • But Labor itself implies that we shouldn't read too much into the changes, explicitly stating that the newest weekly claims numbers "are not directly comparable to claims reported in prior weeks."

If all that weren't enough, Maryland announced on Monday that it found 508,000 potentially fraudulent claims since May, which is massive for just one state. And this may just be scratching the surface.

The big picture: "All of these types of issues make it challenging to use the claims data to get a reliable signal about labor market conditions," Silver said in his report.

Be smart: These are just claims. And anyone can file a claim. Even people with jobs who have no chance of qualifying for payment.

  • Currently, only around 36% of those filing an initial claim ultimately qualified and received a benefit payment. It was even worse last year, going as low as 20% during much of the year.
  • This is far below the pre-pandemic trend of 40%-45%.
  • "Many states are still having a problem with backlogs [of unprocessed claims]," Jane Oates, president of WorkingNation and a former Labor Department official in the Obama administration, tells Axios’ Courtenay Brown.
Mapped: State of jobless benefits
Expand chart
Data: Axios research; Cartogram: Michelle McGhee/Axios

A total of 26 states will have phased out extra unemployment benefits by July 31.

Yes, but: There are also other factors keeping able workers out of the labor force including fear of COVID-19 and child care issues.

What to watch: These extra UI benefits in all U.S. states will expire by Sept. 4. Maybe by then, some of these other noisy variables will have stabilized and initial claims will be useful again.

Go deeper

Sep 29, 2021 - Health

The health care knives are out

Illustration: Sarah Grillo/Axios

As Democrats grapple with if and how to trim the health care components of their reconciliation bill, they have two options: to slash the value or longevity of the benefits they've proposed, or force other industries to pay up.

Why it matters: Democrats' original plan involved picking a fight exclusively with the pharmaceutical industry. But the more ground pharma gains, the more incentive Democrats will have to attract the ire of other powerful industry groups— or to forego major policy priorities.

"Atmospheric river" to whiplash Northern California from drought to flood

A map depicting 24-hour preciptation forecast (inches) ending Monday at 5a.m. local time. Photo: NOAA

A series of powerful "atmospheric river" storms are set dump historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

10,000 trees near giant sequoia groves to be removed after fires

A firefighter looks up at a giant sequoia tree after fire burned through the Sequoia National Forest near California Hot Springs, California, on Sept. 23. Photo: Patrick T. Fallon/AFP via Getty Images

"Upwards of" 10,000 trees near giant sequoia groves have been "weakened by drought, disease, age, and/or fire" and must be removed in the wake of California's wildfires, the Sequoia and Kings Canyon National Parks announced.

Why it matters: The damage to these trees, considered "national treasures," and work to remove them means a nearby key highway must remain closed to visitors as they have "the potential to strike people, cars, other structures, or create barriers to emergency response services," per a statement from the national parks.

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