Jobless Claims Up

Economists watch the weekly reports of initial jobless claims for the first indication of possible new trends in the American economy.  The latest two reports suggest that a possible new trend could be negative.  On Thursday, the Department of Labor reported that, for the second week in a row, jobless claims rose.

Specifically, for the week ending December 14, unemployment claims, on a seasonally adjusted basis, were 379,000.  This is the highest number since the week that ended March 30.

The following graph shows the seasonally adjusted jobless claims since March 9:

For almost all of 2013, there was a trend downward in jobless claims.  In fact, week after week, jobless claims have been lower than the equivalent week one year earlier.  But that changed in December.  Both of this month's weeks were higher than the equivalent week one year ago.

So why are jobless claims rising?  The most likely culprit is ObamaCare.  According to Reuters:

U.S. hospital admissions in November were the weakest in more than a decade, under pressure from a change in reimbursement rules for Medicare patients and confusion tied to the problem-ridden rollout of Obamacare, according to a survey by Citi Research.

New billing rules for the Medicare program for the elderly and disabled require hospitals to treat patient stays lasting less than "two midnights" as an outpatient visit.

"In addition, it is reasonable to conclude that the cumulative impact of changing physician employment and payment models is beginning to play a role, as well as the paralyzing effect of the impotent Obamacare rollout," Citi analyst Gary Taylor said in a report.

Hospital inpatient admissions in November fell to their weakest level in more than a decade, based on responses to the bank's monthly survey of 98 hospitals, Taylor said.

In the last few days there were published reports of hospital layoffs in California, Georgia, Iowa, Maine, Massachusetts, Michigan, Oregon, Tennessee, and West Virginia.

There may be other reasons for the layoffs as well. The uncertainties caused by arbitrary regulations by agencies such as the EPA and arbitrary suits and prosecutions by the Department of Justice have created a belief that the administration is hostile to private business.  As a result, businesses may be retaining earnings or buying back outstanding shares rather than investing their earnings and expanding.

As for ObamaCare, it has encouraged small businesses to limit employment to fifty workers.  Bigger businesses get a one-year reprieve before they become subject to its onerous provisions.  The uncertainties of health care costs discourage business expansions and startups.

Another bad sign, the LA Times reported that Christmas sales have been "tepid" this year, declining 3% over Thanksgiving weekend compared to 2012, possibly because some households, facing higher health care premiums, are cutting back on their consumer spending.

If ObamaCare is driving the layoffs and a decline in consumer spending, then it may turn out, once all the statistics are in, that an ObamaCare recession began at the beginning of December.

The authors maintain a blog at and co-authored the 2008 book Trading Away Our Future.  Dr. Raymond Richman is professor emeritus of public and international affairs at the U. of Pittsburgh and received his economics doctorate from the U. of Chicago.  Dr. Howard Richman teaches economics online.

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