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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