Thursday, February 25, 2010
The impressive decline in unemployment claims that began last April has been derailed. This may be a sign that the economy is turning south, but it may also be just one of those things that happen on the road to recovery. I note that similar setbacks occurred several times (and more severely) in the early years of the recoveries following the '90-91 recession and the '01 recession. The recent jump in claims may also be due to weather, and it seems likely that snowstorms in the East will contribute to a disappointing jobs number next week. I think you have to expect data to be volatile from time to time. It's much more likely that we are just seeing random noise here than that there is a fundamental change in the economy's direction afoot.
UPDATE: As an alert reader reminds me, non-seasonally adjusted claims have actually plunged from 800,000 during the week of Jan. 8th, to 452,000 in the most recent week. That the seasonally adjusted number has risen over this same period means that claims haven't fallen as much this year as they might normally be expected to. But it's possible, especially given the gyrations of the past few years, that the seasonal adjustment factors are off. This is a good reminder that you should always take statistics like this that are subject to seasonal adjustment with a grain of salt.
Posted by Scott Grannis at 8:41 AM