(This is a repeat of yesterday's post which seems to have been lost)
Last week I argued that the huge and unexpected rise in unemployment claims was most likely due to seasonal adjustment factors. Further, I predicted that if this were true then we would see claims fall back down in subsequent weeks. Today's number (which showed a decline of 40K) is right on track in confirming that diagnosis and prediction.
The top chart shows seasonally adjusted claims, while the bottom chart shows the raw, unadjusted data. In the raw data, we see there has been no meaningful rise in claims. The expected seasonal adjustment factors that would indicate a decline in the raw data didn't happen. Seasonal events don't always happen the way the seasonal adjustment factors expect, and this was one of those times. Expect to see further declines in the seasonally adjusted claims number in coming weeks.
Since I've been reading CBP u have been dead on!
ReplyDeleteExcellent commentary by Scott Grannis. The recovery is proceeding; just painfully slow.
ReplyDeleteCommodities tanking again--I think this is it for that asset class.
ReplyDeleteWhich brings up an interesting question: if commodities tank, unit labor cost retreat, and real estate is dead (including all commercial rents), then where is the inflation?
And if M2 expands at its pokey 6 percent rate, how on Earth do you get hyper-inflation?
Great article over at the Mises about how rising commodity prices are not the result of production but rather increased money supplies.
ReplyDeletehttp://mises.org/daily/5273/Macro-Confusion-Inflation-Commodities-and-the-Fed
The short version is increased production actually causes prices to drop, not rise.
"Therefore, by definition, if emerging markets are truly growing quickly, they are creating new goods and services at a very fast rate; they are producing more commodities and other goods. Their demand for purchasing commodities is being enabled (i.e., paid for) by those other recently produced goods that are given in exchange for commodities, and whose creation lowers both domestic and international prices. And if the United States (and other Western economies) were truly growing as well, it, too, would be producing more goods, causing prices to decline. All of this increased production would cause all goods — including commodities — to fall in price, not to rise."
Ben,
ReplyDeleteRead up here on myths about the Japan lost decades.
http://mises.org/daily/5170/The-Myth-of-Japans-Lost-Decades#numbers
"Despite conventional opinion, Japan's economy has not been stagnant; it has in fact been growing in real terms — although not in monetary terms. The crucial point is that monetary changes do not necessarily reflect real changes. Japan's GDP growth has been slow because money-supply growth has been slow; it is mainly money growth which drives GDP numbers. Therefore, going forward, we must try to observe real economic growth — the production of real goods and services — instead of just GDP. Seeing things in the correct light allows us to recoup Japan's lost decades, which weren't really lost."
Public Library-
ReplyDeleteThanks for the link. I will read it. Working now, but maybe tonight.
However, I am dubious--by most measures, Japan has badly underperformed other nations, including even France.