Goldman's Hatzius Says Today's Claims Have Extended Benefits Dark Side

 BOTTOM LINE: Initial claims fall, adding support to claims that distortions could have been a factor in the preceding increases. Although continuing claims also decline, the number of recipients of extended/emergency benefits posts another large increase, pushing total claimants closer to the highs reached earlier this year.

US-MAP
Initial claims +2 (2, +1)
Continuing claims 0 (1, 0), including a -1 judgmental adjustment for ongoing increases in extended/emergency beneficiaries.

KEY NUMBERS:
Initial claims -31k to 473k in week ended Aug 21 vs. median forecast 490k.
Continuing claims -62k to 4.456 million in week ended Aug 14 vs. median forecast 4.495 million.

MAIN POINTS:
1. Initial claims fell more than expected last week, back to the upper end of the range that had prevailed during most of the year before the latest run-up. Although we had discounted assertions that special factors such the termination of temporary Census workers and the renewal of emergency benefits caused this increase, last week's decline adds some support to that case.

2. Continuing claims also fell - by 62k - to level below what most forecasters expected. However, the number of people receiving extended or emergency benefits rose another 301k. In our view, this offsets the positive surprise from this part of the report, leading to the judgmental adjustment on the US-MAP reading for this part of the report.