Weekly initial jobless claims are scheduled to arrive premarket Thursday as usual, but there are big concerns about the usefulness and soundness of the figures given benefit fraud on the state level.
“The jobless claims numbers right now are literally unbelievable” given the evidence of fraud in Massachusetts, Pantheon Macro Chief Economist Ian Shepherdson wrote in a note.
“The increase seen in initial weekly unemployment claims is not reflective of individuals filing for unemployment insurance but rather fraudulent attempts on the system,” a spokesperson for the state’s executive office of labor and workforce development, said in statement to Bloomberg.
National claims for first-time unemployment benefits rose above 260K last week, rising steadily after coming in below 200K for the last three weeks of March. Today’s consensus is for a drop to 254K. The report hits at 8:30 a.m. ET.
“We find that Massachusetts accounts for nearly all of the recent shift up in the pace of weekly jobless claims reported nationally,” J.P. Morgan said in a note.
“Huge question marks now hang over the weekly jobless claims numbers,” Shepherdson said. “The Massachusetts State website states that the bogus claims – made using stolen personal information – are part of a ‘nationwide unemployment benefits fraud scheme’, so we can’t rule out similar distortions to the claims data in other states.”
“The Kentucky state website, for example, also flags an increase in the number of imposter claims.”
“Details of the timing and the scale of the recent claims fraud are sparse, but a comparison of the trend in the national numbers versus the trend in claims ex-Massachusetts suggests that the spike in fraud began sometime in late January/early February,” Shepherdson added. “It appears to have caused national total weekly claims to be overstated by as much as 20K.”
“That said, the prior upward trend in applications since December remains intact even when we strip out Massachusetts from the national data, and the latest reading is comfortably above the recent lows,” he said. “Moreover, the uptrend in the rate of increase of continuing claims in Massachusetts suggests that not all of the recent increase in applications are due to fraud, though that assumes that bogus claims are detected before benefit payments begin.”
“In short, we can’t know the relative shares of fraudulent and genuine claims with any certainty; we will await the revised numbers with bated breath, but no date has been set. That said, we find it hard to believe that none of the recent uptrend in jobless claims is real.”