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Get ready for a jump in initial claims

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August 12, 2009 – Comments (4) | RELATED TICKERS: SPY , QQQ

Unemployment insurance claims figures are to be released tomorrow morning, and if the data from Google Insight is right, we will likely see a sequental increase in initial claims.

Here's the correlation between U.S. search volume for the term "unemployment insurance"  over the last 5 years versus actual data form the department of labor:

 
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The correlation is fairly striking, although you'll notice what appears to be a large overhang of search volume versus actual claims in the first few months of 2009. This may be due to the overall climate of fear at the time, with people looking into the application process for unemployment insurance in case they find themselves out of work.

Here is a closeup of the data over the last 90 days (the blue solid line shows daily search volume whereas the graph above shows weekly; the dotted line is the search volume moving average over a 7 day period):

 
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Again, we seem to have an overhang of search volume in the last 4 weeks (actual initial claims dropped, but search volume held steady). I can't explain this, but perhaps a better indicator might be the bottom chart showing the week-over-week change. It appears that week-over-week changes in search volume may provide an early indicator for initial claims filings. This makes sense, since potential claimants are likely to research the application process a few days before their application is received and processed.

If the correlation holds, we will likely see a jump in filings for the previous week as reported tomorrow. Looking forward, it appears that there are even more people looking into unemployment insurance this week. The volume for Saturday August 8, and Sunday August 9 is at the highest level since April.

4 Comments – Post Your Own

#1) On August 12, 2009 at 6:50 PM, gunark (81.84) wrote:

P.S. Another explanation for the overhang in search volume (in spite of a drop in initial claims) may be that people continuing their claims are responsible for some of the search volume (i.e. researching additional information, for example how to renew their claims, continuing eligibility, etc.)

In other words, search volume is a combination of both initial claimants and continuing claimants. I would suspect though that the majority of the traffic is generated by initial claimants, since this seems like the most obvious time when one would Google "unemployment insurance".

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#2) On August 12, 2009 at 7:17 PM, AdirondackFund (< 20) wrote:

Nice work, thanks for posting.

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#3) On August 13, 2009 at 9:29 AM, brickcityman (< 20) wrote:

Kudos

 

I suspect this form of analysis might have its pitfalls, but the more information we aggregate the better off we are.

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#4) On August 13, 2009 at 10:40 AM, gunark (81.84) wrote:

Looks like the prediction wasn't too far off.

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