I realize that the big drop in unemployment claims is now old news, but nevertheless it is still impressive and a reminder that the healing forces in the economy are still very much alive and well. Yes, there is a lot of room for improvement, but let's not let the perfect be the enemy of the good. Weekly claims have fallen by one third since the high last March, and today are only 40% above what might be considered "normal." If nothing else, this is hard evidence that there has been some significant improvement on the margin in economic conditions.
For those who are still skeptical of this year's strong advances in equities and corporate bonds, I would note that one year ago the market fully expected that today the economy would be in a deep recession, engulfed by deflationary forces. Last March, when the S&P 500 was 40% lower than it is today, the market upped the ante to include a mega depression and a federal government that would know no limits to its expansion or its appetite for the world's savings. Instead, the economy is now in the early stages of a recovery, a stabilization of the labor market is within sight, and the Obama administration's initiatives are being seriously challenged on several fronts. Changes on the margin are what drive markets, and we have seen a gigantic change for the better over the past year.
There is a particular shape to nonseasonally adjusted jobless claims after the middle of the year when you use a 12 week moving average the shape of the moving average this year is decidedly bullish for continued favorable
ReplyDeletejobless claims numbers.
with official (atm) rate of 17.5% there are not so many people left to be fired. or should we factor in a work-force adjustment on top of SA?
ReplyDeleteScott, do the two four day weeks in the past three weeks have any impact on these numbers? Or are the numbers adjusted for Veteran's Day and Thanksgiving?
ReplyDeleteAFter today's number, your question is moot. There is genuine improvement taking place in the labor market.
ReplyDeleteThis market is still losing jobs (to the tune of 52k a month) and stimulus is running out. Yes, situation is getting better. No, companies do not hire people on the net basis.
ReplyDeleteTodays unemployment rate is noise as it often is. People without jobs do not spend. Unemployment rate is relevant only for FED models and not real economy.
Scott said:
ReplyDeleteAFter today's number, your question is moot. There is genuine improvement taking place in the labor market.
I suppose that's true if you are a woman working a payroll job in professional/business services, health/education services or government. 190K of the 227K newly employed in the household survey were women and those three categories were the only ones in the establishment survey to show gains. Unemployment for adult men was 10.5%.
Well, the improvement has to start somewhere, doesn't it? If jobs start growing for whatever reason, that soon becomes a virtuous cycle.
ReplyDeletesure. But we are not there yet. This is just noise. Nothing has really changed in the economy and people are still loosing jobs whereas economy should gain 100k+ in order to have stable employment. However "slower" it is, it is still getting worse. Especially given that one point means no trend.
ReplyDeleteOn the margin, the changes we are seeing are very positive. That's the most important thing to me.
ReplyDeleteIt appears to be so. But remember that in July unemployment also went down compared to June. Then we were talking about 9.4%. Three months later we were almost one percentage point higher
ReplyDeleteBut back in July unemployment claims were almost 600,000 per week, compared to less than 500,00 per week now. Also, commodity prices were lower, credit spreads were higher, shipping rates were lower, etc. Lots of things have improved since then, not just jobs.
ReplyDeleteno question about this. but in many if not most cases that is still second derivative story
ReplyDelete