Continuing Jobless Claims Actually Rise

Initial jobless claims can't fall! The press has bombarded us with headlines about how initial jobless claims fell from a week ago; but to us that is an oxymoron. It is the same as saying the economy contracted by -2% in the fourth quarter to grow by 4% (versus 6% growth a year ago). Nothing really contracted, the economy just grew at a slower rate.

Jobless claims are no different, fewer people reported new jobless claims this week than they did last week, but 467k people still lost their jobs!

We are much more concerned with the underlying continuing jobless claims, which actually rose from a week ago and is now even with the all-time highs set in 1975 and 1982. The change in non-farm payrolls expected tomorrow morning is potentially even more disconcerting. Last month the number came in at -533k, and this month it is expected to be -523k. In this history of the indicator (starting in 1939) there has never been an instance of back to back declines in excess of -500k.

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Comments

[Stock Trade...:]

Also keep in mind that the method used today to calculate the unemployment rate is different from prior to the 1980's. If the same method was still used, the numbers would be a lot worse than what they currently are announced as.

Another thing not mentioned in the numbers is the number of cash employed workers in the U.S., especially in the construction industry, who are unemployed. While they may not contribute as far as paying income taxes, they surely spend their money in the economy as we all do. This is added pressure to the economy not showing up in the unemployment numbers.

Jan 09 09:37 AM