Jobs and Housing: No Gain, More Pain 13 comments
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The holiday break in rising jobless claims is over and the lines at the unemployment office are once again growing longer. That's the message in this morning's update of new filings for jobless benefits.
Initial claims jumped sharply to 589,000 for the week ended January 17. That matches the level posted for the week through December 20. The bad news is that we're again at the high point for the cycle so far. Unfortunately, there's no reason to think that new jobless claims won't go higher still. Indeed, a reading of other economic statistics far and wide virtually assures that bearish future. Since this data series is considered a "leading" indicator, it also looks like the unemployment rate, which generally lags initial claims, is set to rise further as well.
Adding to the evidence that the momentum in the labor market is still negative, and is likely to remain so for some time, is the latest reading for continuing jobless claims. The update today is through January 10 and relates that we're now at just over 4.6 million, up 97,000 from the previous week. That puts continuing claims at just under the high for this cycle, set in the week through December 27.
It's hard to overestimate the relevance of the labor market's influence for the economy. Much of the fuel for economic growth, starting with consumer spending, is closely tied to employment trends. Wage income, in other words, is the critical element that breathes life into economic expansion. When that economic stimulant is on the defensive, it has far-reaching effects.
No one, then, will be shocked to learn that new housing starts fell again in December at a steep 15.5% seasonally adjusted annualized rate, the Census Bureau reports. New building permits also tumbled, falling nearly 11% in December vs. November. The decline in permits, a leading indicator for the housing sector, continues to speak loud and clear: construction activity in residential real estate will continue to slow.
The forces of recession and contraction, in short, are now in control. As we discussed yesterday, the best current hope for slowing the descent flows from the massive stimulus via monetary policy, which is increasingly being joined by a comparable fiscal effort engineered by Congress and the White House. But there's no sign yet that the government's efforts to right the economy is having much, if any, effect, although one can argue that the pain would be much worse in the absence of Washington's aid.
In any case, all eyes are looking for a sign, any sign, that the bleeding will stop. When might that magic day arrive? For clues, Paul Kasriel, director of economic research at Northern Trust, recommends watching the leading economic indicators (LEI).
"When the three-month moving average of the LEI quits declining, this will be a strong signal that a recovery is on the horizon," he writes in a research note earlier this week. "Right now, the LEI are not signaling that a recovery is imminent. But we will make a bet with you. The behavior of the LEI will signal a recovery before the consensus of economic forecasters does."
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May your Dow never Jones!
www.whatwouldwarrendo....
Is this the data for the same housing market that comical pundit Jim Cramer is said to have bottomed months ago?
"The forces of recession and contraction, in short, are now in control."
No...please, not in short.....please detail why you think this?
Seriously.
We have hundreds.....HUNDREDS OF TRILLIONS of dollars of fake derivative assets that made up most of the last decade's global economic advances. Only a small fraction of that has been marked to market and disposed of.
Layoffs are only beginning to surface. That's right....ONLY BEGINNING! Corporate Bankruptcies are ONLY JUST BEGINNING! The Commercial Real Estate Crash is ONLY JUST BEGINNING! The Alt-A and Prime crash is ONLY JUST BEGINNING!
The MULTI-TRILLION DOLLAR FEDERAL BAILOUT IS NOT JUST BEGINNING! It does not exist yet. It is weeks away. It will be so massive as to shock everyone which will slow the thing down. It will be SO BIG, SO COMPREHENSIVE that it will take more than a year to fully implement. By then the crash may have bottomed.....
May have.
There is absolutely nothing contained at this point. And even if that illusion should come to pass.....just wait a few years for all this new Federal Debt to rot in the system by the time Medicaid goes broke in 2014. Oh yeah....just in time for even more Social Security leaches to ask Daddy Warbucks Uncle Sam for their check. And inflation to be double digits. And oil back in triple digits.
Oh yeah....everything is contained all right.
If you look at this as a sine wave and both above and below trend need equal area, they can let it fall fast and into a pit and it will be over soon, or it will be deep and last years or decades. It will be one of the two, but it cannot be back to the 2006-2007 frame anytime soon. Also depnds on where the trend line (absent bubbles, abusive credit, etc) would have occured over the past 15-20 years.
On Jan 22 02:05 PM prudentinvestor wrote:
> It will take years for our economy to re-adjust to a new and stable
> situation, where people can spend based on what they earn, not based
> on what they borrow.
An economy that is largely based on consumer spending can have massive problems with unemployment that are deep and exponential. The models do not take into account the economy we have today, but, for you naysayers, go check it at BLS, etc.
It's going to be bad news.
On Jan 22 01:28 PM constructe wrote:
> There is no single economist who does not see unemployment rising
> over Q1 and Q2. So don't expect anything good on that front for the
> forseeable future. The good news is theoretically it is already somewhat
> factored in to the stock market (meaning it may fall below the trading
> range but not drop 25% is my guess).
www.shadowstats.com
And specifically this page.....
www.shadowstats.com/al...
You will see that the broader, more accurate unemployment number is nearing 14%. But if we counted unemployment the way they did in the Depression to arrive at the 25% mark that we still report on to this day, then unemployment today stands at just under.....
18%
Also, look at the bottom chart at GDP. According to the Federal Government we are still in positive GDP (albeit, dropping like a rock).
Once again, the way we compute GDP has changed. If we did it like we used to the chart shows we have been in NEGATIVE GDP since late 2004/early 2005.
HHHMMmmmmm.....just about the time the whole mortgage back derivative insanity really kicked in.
Connection? I'll let you guys decide.
Thanks for making that additional information available. Absolutly correct on this...
One of the first thing I learned about unemployment data/government data was, when our professor said:
What's the unemployment rate? Whatever you want it to be.
In other words, government statistics in general and unemployment statistics in particular are framed in the best light. Reality is usually much, much worse.
Anyhow, I think there have been several major revisions in how things like unemployment is reported, CPI, etc, just in the past 20 years since the 1987 time frame, let alone the 1920's-30's.
Sentinel, maybe you or someone else on SA has this statistic, but just to keep up there has to be major job creation levels each month. When you have no job creation, let alone job losses, it's AAAHHH!
On Jan 22 02:56 PM Sentinel wrote:
> To augment your point curbs-in, I encourage everyone to not only
> go to the BLS but hop over to Shadow Government Statistics
>
> www.shadowstats.com
>
> And specifically this page.....
>
> www.shadowstats.com/al...
>
> You will see that the broader, more accurate unemployment number
> is nearing 14%. But if we counted unemployment the way they did in
> the Depression to arrive at the 25% mark that we still report on
> to this day, then unemployment today stands at just under..... <br/>
>
> 18%
>
> Also, look at the bottom chart at GDP. According to the Federal Government
> we are still in positive GDP (albeit, dropping like a rock).
>
> Once again, the way we compute GDP has changed. If we did it like
> we used to the chart shows we have been in NEGATIVE GDP since late
> 2004/early 2005.
>
> HHHMMmmmmm.....just about the time the whole mortgage back derivative
> insanity really kicked in.
>
> Connection? I'll let you guys decide.
No, I don't have jobs creation numbers handy, but out here in the real world it sure feels like job creation is at a near-standstill.
Also let's not forget, particularly when we are dealing with Government Stats that then get regurgitated on (C)ornucopian (N)itwit (B)latherhead (C)abal .......
There are lies, damn lies, and then there are statistics.
"There are lies, damn lies, and then there are statistics..."
Should be...
There are lies, damn lies, statistics and then there are politicians.
On Jan 22 04:34 PM Sentinel wrote:
> Thanks.
>
> No, I don't have jobs creation numbers handy, but out here in the
> real world it sure feels like job creation is at a near-standstill.
>
>
> Also let's not forget, particularly when we are dealing with Government
> Stats that then get regurgitated on (seekingalpha.com/symbo...
> (seekingalpha.com/symbo... (seekingalpha.com/symbo...
> (seekingalpha.com/symbo... .......
>
> There are lies, damn lies, and then there are statistics.