California at center of today's snafu on jobless numbers?*

You might have heard on the news this morning about a huge drop in jobless claims - 33,000 weekly filings, which is way larger than what anyone expected. That brought down total claims to 339,000, which is the lowest level in four-and-a-half years. Now as a rule these unemployment reports deserve only minimal attention because they're often volatile (way more so than the monthly reports, which are volatile enough). However, in this election season they've become somewhat of a mindless media event - certainly a political event. But soon after the report was released came news that the 33,000 number was flawed because one large state did not provide any numbers. As it turns out, according to Business Insider's Henry Blodget, citing a Labor Department source, all the states were included, but California did not submit all of its claims.

This happens occasionally, our source says. When a state's jobless claims bureau is short-staffed, sometimes the state does not process all of the claims that came in during the week in time to get them to the DOL. The source believes that this is what happened this week. The California claims that were not processed in time to get into this week's jobless report will appear in future reports, most likely next week's or the following week's. In other words, those reports might be modestly higher than expected. The source believes that the number of California claims that were not processed totaled about 15,000-25,000. Thus, if one were to "normalize" the overall not-seasonally-adjusted jobless claims number, it would increase by about 15,000-25,000.

That would work out to weekly filings of between 355,000 and 365,000, which is still better than expected, but not a barn burner. It'll all get revised in the coming weeks, but here is yet another example of why economic data cannot be interpreted in real time, despite the relentless push for instant reactions. Of course, this is certain to reignite the conspiracy-minded loonies who insist that the Obama administration is somehow gaming the system. It certainly didn't help the stock market, which opened higher but then kept sliding as word of the miscue began making the rounds. At the close, the Dow lost 18 points.

*Update: Well, the folks at California's Employment Development Department are none too pleased with the Business Insider report. From press release:

Reports that California failed to fully report data to the U.S. Department of Labor, as required, are incorrect and irresponsible. The California Employment Development Departmenty, which administers the Unemployment Insurance program in the state, has reported all UI claims data and submitted the data on time.

The BI post has not been updated, so we'll see. Meanwhile, a Labor Department analyst told Reuters that California was probably the state that caused the sharp drop in the seasonally adjusted figure, though there was nothing mentioned about California not submitting all its claims. Seems like we're entering the murky world of government bean counting - another reason to be careful about drawing too many conclusions from these reports..