Jobless claims fall sharply to 730K as weather, fraud distort data

The number of new claims for unemployment insurance appeared to plummet last week, dropping to a seasonally adjusted 730,000 during the third week of February from a revised total of 841,000 the previous week, according to data released Thursday by the Labor Department.

The 111,000-claim decrease in weekly jobless benefit applications during the week ending February 20 brought the total well below analysts’ expectations of roughly 845,000 new claims.

Even so, federal watchdogs have warned that claims data is extremely vulnerable to being distorted by processing errors. That raises questions about the true size of last week’s decline, especially as treacherous winter weather disrupted much of the U.S.

“Seasonal related distortions caused a larger than expected decline in first time jobless claims to 730K. Policymakers should take the decline in claims with a grain of salt, which is more than was available for the roads in Texas which froze over during that week,” tweeted Joesph Brusuelas, chief economist at audit and tax firm RSM.

Ohio’s jobless claims have also been driven higher by scammers, according to state officials, artificially inflating the national total of claims. Ohio received an adjusted total of 100,792 claims last week, nearly one-seventh of the national total and far more than any other state.

Despite the data’s limitations, the consistently high level of jobless claims shows how the U.S. remains far from a full labor market recovery nearly a year after the onset of the coronavirus pandemic.

Federal Reserve Chairman Jerome Powell warned lawmakers this week that the U.S. still needs significant economic support through both fiscal and monetary measures to ensure a strong recovery from the pandemic-driven recession.