Thursday, April 12, 2012

Last week's increase in claims is not significant



Weekly claims for unemployment jumped "unexpectedly," but I don't think this leads to the conclusion that the labor market is suddenly deteriorating. As the second of these two charts shows, weekly volatility in this series is the norm. As the first shows, when comparing the recent week to the same week a year ago, the pattern of unadjusted claims is the same. Unadjusted claims this year were almost 9% below where they were a year ago, and that is in keeping with the pattern we've been seeing for the past two months. Given that Good Friday was involved in one of these numbers, it's likely that today's reported increase in claims was an artifact of the seasonal adjustment process.


18 comments:

brodero said...

The 52 week moving average of non
seasonally adjusted jobless claims
dropped 1118 to 393,233. In the fact
the pace of the drop continues in a faster fashion that last year. Nothing recessionary in these numbers.

Unknown said...

A lot of people lately have been citing year-over-year percentage decreases in initial claims, noting that the pace of improvement has been deteriorating, which they say is a warning sign. However, last year we saw a big jump in claims at the end of April in response to supply chain disruptions due to the Japanese earthquake, so, barring some disaster in the next month, we should see the year-over-year improvement increase.

Benjamin said...

Still, a lot of signals lately that the economy is slumping again.

We could wait until we are back into another deflationray recession, or better, we could go to QE3, sustained and serious, now.

People said QE1 and QE2 would lead to hyperinflation.

Instead we are below the 2 percent target (a dubious target in deep recessions anyway).

I cannot understand the feeble, dithering, peek-a-boo and hide-and-seek Fed.

We didn't know that when Bernanke went to Japan on an advisory mission, it was not give advice but receive it.

Y-O-Y corporate profits are now flatlining. So without an expansion of PE's, how can we see a stock market rally? Pe's can't expand with the Fed's monetary noose around the economy's neck. Property is dead, flatlining also. It bottomed out and stayed there.

That leaves bonds---you get enough bondholders, and your economy will die. They demand zero inflation, and we know how that worked out in Japan.

Dangerous trends afoot.

Yet many on the right-wing are looking in the wrong direction for threats. From inflation and foreign militaries--threats now decades past.

The left-wing, as usual, is clueless altogether.

marcusbalbus said...

if they had improved, you would have crowed about he downward trend; grow up.

Dr William J McKibbin said...

The US as a nation has "given up" on creating jobs here at home -- the reality is that US firms such as Apple and Motorola have moved their consumer manufacturing operations permanently overseas for a reason -- those who remain unemployed in the US should either emigrate overseas in seach of work, or embark on adding world-class skills to their resumes (such becoming a doctorally training physician or research scientist, or perhaps becoming a professional athelete or film star) -- for a peak at why jobs are not coming back to America, check out this video:

http://wjmc.blogspot.com/2012/04/foxconn-employees-at-work.html

Any work that can be outsourced from the US, will be outsourced -- work that cannot be oursourced (such as drilling, mining, medicine, concierge services, and so forth) are the only jobs that will remain in the US -- jobs that have even the slightest chance of being outsourced should be avoided like the plague -- we live in a new world and global economy -- better to accept that reality than to live in delusion...

Dr William J McKibbin said...

@Benjamin, monetary expansion is off the radar for the remainder of the decade at least -- rather, austerity has been adopted as the way forward -- in truth, both monetary expansion and austerity carry risks -- monetary inflation risks inflation -- austerity risks political instablity -- however, austerity is the order of day in the US and overseas at this point, so we might as well get on with it -- my fear is that no one will accept the extent of the austerity that is needed in order to make the economy work -- what we need are very drastic cuts in government spending or drastic increases in taxes, or both -- that's what austerity means -- less spending and/or more taxes -- unfortunately, I have zero confidence that America is ready to embark on minimum 40% cuts in government spending across the board -- that's too bad because austerity could work if the cuts are deep enough -- oh well -- assuming austerity measures are passed by Congress and signed by the President (which is likely under a Romney administration), then America will come back again by 2035 or so -- in the mean the time, everyone living today will suffer a decline in their standard of living until then with the exception of the 1% crowd -- hence, the key to the future is to do what is required to join and stay in the 1% crowd -- everyone else is in for dark times...

Dr William J McKibbin said...

One of the indicators to keep an eye on are real wage cuts -- many managers are being offered new jobs at half wages in the current economy given the abundance of management talent available in the US -- one way to ramp up dividends is to drive down wages by offering people opportunities to keep their jobs with deep wage cuts in the new position -- real wage cuts would be good news for earnings this year...

Dr William J McKibbin said...

PS: According the the BLS, real average hourly earnings for all employees fell 0.3 percent from January 2012 to February 2012 (seasonally adjusted). More at:

http://www.bls.gov/news.release/pdf/realer.pdf

Hammering down real wages in the US would be good for profits and dividends this year.

Benjamin said...

Here is a FRED chart to warm Grannis' heart:

http://www.themoneyillusion.com/wp-content/uploads/2012/04/nominalG.png

Hard as it is to believe, for the first ever, federal government outlays are down y-o-y, in nominal terms.

scottmba09 said...

This blog provides an interesting perspective. What sucks are the constant negative clingers-on that comment with the same garbage every day. I get it, the world is going to hell.

William said...

scottmba09 said...
"This blog provides an interesting perspective. What sucks are the constant negative clingers-on that comment with the same garbage every day. I get it, the world is going to hell."

I think the techy term for it is "hi-jacking" a Blog. They must be bored at their day jobs.

Benjamin said...

You know, Bernanke went to Japan on an advisory mission before he became Fed chief. What we didn’t know is that it was to receive advice, not dispense it.

Let’s see: The TIPS market is predicting the lowest inflation since the Great Depression, and we are about 13 percent below trend GDP and about one out of every 20 Americans has left the labor force and not come back.

The national debt is ballooning.

Sure, steady as she goes.

Squire said...

I bought the dip.

William said...

Europe’s Capital Flight Betrays Currency’s Fragility

"The flows are tough to quantify, but they can be estimated by parsing the balance sheets of euro-area central banks. When money moves from one country to another, the central bank of the receiving sovereign must lend an offsetting amount to its counterpart in the source country -- a mechanism that keeps the currency union’s accounts in balance. The Bank of Spain, for example, ends up owing the Bundesbank when Spanish depositors move their euros to German banks. By looking at the changes in such cross-border claims, we can figure out how much money is leaving which euro nation and where it’s going.

"This analysis suggests that capital flight is happening on a scale unprecedented in the euro era -- mainly from Spain and Italy to Germany, the Netherlands and Luxembourg (see chart). In March alone, about 65 billion euros left Spain for other euro- zone countries. In the seven months through February, the relevant debts of the central banks of Spain and Italy increased by 155 billion euros and 180 billion euros, respectively. Over the same period, the central banks of Germany, the Netherlands and Luxembourg saw their corresponding credits to other euro- area central banks grow by about 360 billion euros.

http://www.bloomberg.com/news/2012-04-12/europe-s-capital-flight-betrays-currency-s-fragility.html

Interesting I thought. I had no idea how this worked.

Rob said...

Scott, please write a post addressing the criticisms that u are a perpetual Pollyana. Talk about what it would take for you to become pessimistic about the economy. Thanks.

Scott Grannis said...

I'm not a perpetual Pollyana, but some readers seem to think so. Ever since early 2009 I have been forecasting a sub-par recovery (3-4% real growth), when a normal recovery would have been 5-6% real growth. I've talked repeatedly about all the headwinds (problems) that the economy faces, as the reason for sub-par growth: ultra-accommodative monetary policy and misguided Keynesian fiscal stimulus being the two major culprits, followed by increased regulatory burdens. The main reason I come across as bullish is that I have been consistently less pessimistic than the market. The market has been expecting very weak growth, and I've been expecting only modest/moderate growth, so that makes me bullish relative to the expectations priced into the market. If the market has expected a recession for the past 6-9 months and I have expected only slow growth, that makes me a "relative optimist." When I see 2% 10-yr yields, I infer that the market is extremely pessimistic about the prospects for growth; if I expected to just 1-2% growth that would still make me an optimist in a relative sense. The economy is far from great, but it is still growing by all measures that I track, so I remain optimistic, but only because the market is so pessimistic.

Rob said...

Great explanation, thanks Scott !

brodero said...

By my amateur calculation there is at least 2 trillion dollars sitting in
savings deposits because they are scared....