Thursday, August 19, 2010

Another “UNEXPECTED” tanking in weekly jobless claims data… UPDATED, 400,000 the new yardstick?

If this weren’t so pathetic, it would be comical. 

via Reuters:

New US claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday's report.

The temporary census jobs are gone.  The stimulus money is all but spent. Last month’s non-farm payrolls showed a mere 71,000 new private sector jobs.  Consumer prices are weak.  Business inventories are piling up in the wake of sluggish consumer demand.  Companies are sitting on huge sums of cash and cash-like liquid assets, fearing uncertainty for future demand. Economists are revising GDP forecasts from 2.0+ percent to 1.5- percent.

So why should we expect jobless claims to do anything but follow suit and circle the drain?

Update: I just read through the whole Reuters report, and nearly spit out my coffee when I caught this:

Claims have not come close to the 400,000 level that most analysts generally view as the dividing line between payrolls growth and contraction.

This is nothing more than an attempt to move the goalposts. “Most analysts” do not generally view the 400,000 threshold as the dividing line between payrolls growth and contraction.  The real number is about one-quarter to one-half that, and real expansion would be indicated by a net decrease in jobless claims, not a net increase of a half million.  There are no good reasons to white wash bad news, other than to lessen the impact.

Gimme some feedback in the comments.