Thursday, January 19, 2012

Claims continue to fall


First-time claims for unemployment last week fell by a surprisingly large amount, and were significantly less than expected (352K vs. 384K). Nevertheless, at this time of the year, when layoffs are just coming off their annual peak, the seasonal factors are very large so we have to take this news with a few grains of salt. Still, it's clear that employers by now have done the bulk of the cost-cutting and cutbacks that they needed to do, so the next phase of the economy's expansion will see more emphasis on new jobs rather than getting rid of jobs. That process is underway, but only gradually. Things could improve more convincingly as the year wears on and employers get more comfortable with the likely future direction of fiscal and monetary policy.


7 comments:

Unknown said...
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Unknown said...

Not surprised at this at all. As of Tuesday, the 21-day moving average of withholding tax receipts was about $8500 million, whereas the same period last year it was only around $7100 million. Tuesday may have been an outlyer, but generally since late December, the 21-day moving average has been around $500+ million over the same period the previous year

Dr William J McKibbin said...

As the nation's largest firms get some wind in their sails, layoffs will accelerate via increased automation paid for by earnings -- the more firms can invest in technology designed to replace labor, the more profitable they become -- investors stand to do quite well -- look for dividend-paying stocks and rent-earning (occupied) real estate that is selling at a discount to capital valuations -- those who still have not embarked on upgrading their skills into world-class should do so in haste as skills that earn premium wages generally require 10,000 hours plus of training and preparation -- the future looks good for those who have cash to invest in discounted equities, and skills that earn a premium on the global market -- everyone else is headed into dark times...

Benjamin said...

Unit labor costs now are below 2008 levels, and no higher than 2007 levels, according to BLS.

Labor is getting cheeper and cheaper in the USA. Now how does this fit in with worries about inflation?

How does $1 trillion in QE lead to deflation? When you do not QE hard enough, that is how.

Junkyard_hawg1985 said...

It looks like the Department of Labor messed up the seasonal adjustments on the weekly unemployment results this week. One year ago, there were 549,688 first time claims for unemployment. After seasonal adjustments, there were 415,000 claims (SA). This comes out to a seasonal correction factor of 0.755. For the same week this year, the unadjusted data showed that there were 521,613 first time claims. If you use the same seasonal correction factor as last year, it says there were 394,000 first time claims (SA) which is very consistent with the last few weeks. The Department of Labor reported 352,000 first time claims (SA). That is a HUGE discrepancy.

brodero said...

Junkyard...follow the 52 week moving average of non seasonally adjusted jobless claims

Unknown said...

@Junkyard_hawg1985:

As brodero pointed out last week, the seasonal adjustment they used for last week *over*stated the seasonally adjusted numbers compared to a year ago. So, this week was little more than the ying to last week's yang.