Sustainable Recovery with 530,000 Weekly Claims?

That’s what we seem to be expecting based on the huge uptick in equities since March. While stock markets have long since moved it up a gear, the employment market is stuck in neutral. The latest seasonally-adjusted jobless claims numbers came in at 530,000. The widely-followed four week average is still 526,250 and is not coming down.

These numbers are more consistent with a loss of 200,000 jobs per month than of one of declining unemployment. When you have more people losing jobs than getting them, you don’t have the pre-conditions for a sustainable recovery. The economy needs to move it up a notch or we are looking at a double dip.

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UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS

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	Advance				Prior1
WEEK ENDING	Oct. 24	Oct. 17	Change	Oct. 10	Year

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Initial Claims (SA)	530,000	531,000	-1,000	520,000	485,000
Initial Claims (NSA)	492,456	460,430	+32,026	509,730	449,389
4-Wk Moving Average (SA)	526,250	532,250	-6,000	533,000	477,750

	Advance				Prior1
WEEK ENDING	Oct. 17	Oct. 10	Change	Oct. 3	Year

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Ins. Unemployment (SA)	5,797,000	5,945,000	-148,000	6,034,000	3,773,000
Ins. Unemployment (NSA)	4,968,019	4,916,574	+51,445	4,953,947	3,233,118
4-Wk Moving Average (SA)	5,960,750	6,039,500	-78,750	6,093,250	3,746,500

Source Weekly Unemployment Claims Report – ETA Press Releases

Comments

[User 353732:]

A "statistical" recovery is marvelous thing and a work of art.
It enables WashDc to say that jobs losses, consumer spending(again declining once the bribes to consume and cash for soul programs ended, for a while, until the next round), business bankruptcies, corporate revenues, residential foreclosures, CRE defaults, after tax disposable income are all lagging indicators of little merit. They don't count or contain no information,
The only leading indicators that matter are: stock market(up, so a "V" recovery is already here); oil (up, so it must mean vigorous demand growth: proof of a "V" recovery); Govt spending using vapor money(high and higher, which, absolutely, positively guarantee the greatest "V" recovery of all time).

No job, income or credit? In the New Economy none of these things are needed. Eat debt and clothe yourselves in Govt scrip.
The all knowing, the all merciful, the all powerful WashDc-Wall St CoDominium will provide. Just believe in the STATISTIC and all shall be well.

Oct 30 10:16 AM

[Dave Wrixon:]

After me 1, 2, 3 Everybody!

"Happy days are here again
The skies above are clear again
Let us sing a song of cheer again
Happy days are here again
Altogether shout it now!
There's no one who can doubt it now
So let's tell the world about it now
Happy days are here again
Your cares and troubles are gone;
There'll be no more from now on
Happy days are here again
The skies above are clear again
Let us sing a song of cheer again
Happy days are here again."

Oct 30 10:21 AM

[thiazole:]

The official end of the 1982 recession was Nov 1982. And it was obviously sustainable since we saw very strong growth afterward for most of the next 9 years. So if you are correct, then that SMALLER labor pool back then would be even MORE devistated by these kinds of numbers. Yet, those kinds of number persisted well into 1983 as can be seen below (data obtained from research.stlouisfed.or...).

1982-11-06 626250
1982-11-13 612000
1982-11-20 600500
1982-11-27 594250
1982-12-04 586250
1982-12-11 569750
1982-12-18 554500
1982-12-25 523750
1983-01-01 518000
1983-01-08 512250
1983-01-15 503000
1983-01-22 500500
1983-01-29 492750
1983-02-05 490500
1983-02-12 492250
1983-02-19 494250
1983-02-26 488750
1983-03-05 487250
1983-03-12 484500
1983-03-19 480250
1983-03-26 480250
1983-04-02 479250
1983-04-09 484500
1983-04-16 495750
1983-04-23 497500
1983-04-30 497250
1983-05-07 496750
1983-05-14 484000

Oct 30 10:29 AM

[stockartist:]

Again Washington is spinning their numbers to favor more government spending. I would like to see a breakdown of where the jobs were created by sector. I think the biggest gainers came from Cash for clunkers which
put people back to work, but that is a temporary fix. The Home buyers credit helped in increase consumer spending which help prop up stores, home builders and real estate brokers. And of course the government added jobs.

Can this country stand on it's own two feet with out stimulus? I don't think so, hence we should look for more stimulus to come down the road and with it a weaker dollar and higher gold and oil.

Oct 30 10:37 AM

[Dave Wrixon:]

And could you post the Fed's lending rate at that time? Was it about what it is now? Were they also in stimulation mode back then fiscal and monetary? And if not, how is any of this in anyway relevant?


On Oct 30 10:29 AM thiazole wrote:

> The official end of the 1982 recession was Nov 1982. And it was
> obviously sustainable since we saw very strong growth afterward for
> most of the next 9 years. So if you are correct, then that SMALLER
> labor pool back then would be even MORE devistated by these kinds
> of numbers. Yet, those kinds of number persisted well into 1983
> as can be seen below (data obtained from research.stlouisfed.or...
>
>
> 1982-11-06 626250
> 1982-11-13 612000
> 1982-11-20 600500
> 1982-11-27 594250
> 1982-12-04 586250
> 1982-12-11 569750
> 1982-12-18 554500
> 1982-12-25 523750
> 1983-01-01 518000
> 1983-01-08 512250
> 1983-01-15 503000
> 1983-01-22 500500
> 1983-01-29 492750
> 1983-02-05 490500
> 1983-02-12 492250
> 1983-02-19 494250
> 1983-02-26 488750
> 1983-03-05 487250
> 1983-03-12 484500
> 1983-03-19 480250
> 1983-03-26 480250
> 1983-04-02 479250
> 1983-04-09 484500
> 1983-04-16 495750
> 1983-04-23 497500
> 1983-04-30 497250
> 1983-05-07 496750
> 1983-05-14 484000

Oct 30 12:39 PM

[JAMES CARLINI:]

We are still in a downward spiral. There is still a lot of underemployment that is not being calculated in these job loss numbers.

Underemployment? That's where someone got laid off from a high-paying job (pick a number - $80K -$130K) and eventually took a lesser-paying job $35K-$50K.

If someone is "employed" (underemployed) they do NOT impact the assessment, yet their lack of buying power does.
Those people and their situations do NOT make it into the "government numbers" so to me, all these reports are suspect.

A friend (college degree plus a masters certificate) who fell from a $90K project management job in 2001 was underemployed in a $36K job for the last three years. Tell him the job situation is getting better - He just got laid off on Wednesday. What are his prospects?

Oct 30 12:42 PM

[Edward Harr...:]

It's a bit of apples to oranges given how much more heavily geared the economy was to manufacturing. That meant heavy layoffs due to the inventory cycle. Moreover, what you have to look at is net jobs i.e. Non-Farm Payrolls (NFPs). I have posted often that it is the lack of hiring which makes a 500K or 530K number deceptively high.

What I have said before is that we want to see claims declining more rapidly so that the benefit of stimulus and cyclical factors will still be boosting the economy before the employment situation takes its toll and leads to a double dip.

I expect us to shed jobs into Q1, so that is consistent with 1983. Beyond that and you're in murky water.

On Oct 30 10:29 AM thiazole wrote:

> The official end of the 1982 recession was Nov 1982. And it was
> obviously sustainable since we saw very strong growth afterward for
> most of the next 9 years. So if you are correct, then that SMALLER
> labor pool back then would be even MORE devistated by these kinds
> of numbers. Yet, those kinds of number persisted well into 1983
> as can be seen below (data obtained from research.stlouisfed.or...).
>
>
> 1982-11-06 626250
> 1982-11-13 612000
> 1982-11-20 600500
> 1982-11-27 594250
> 1982-12-04 586250
> 1982-12-11 569750
> 1982-12-18 554500
> 1982-12-25 523750
> 1983-01-01 518000
> 1983-01-08 512250
> 1983-01-15 503000
> 1983-01-22 500500
> 1983-01-29 492750
> 1983-02-05 490500
> 1983-02-12 492250
> 1983-02-19 494250
> 1983-02-26 488750
> 1983-03-05 487250
> 1983-03-12 484500
> 1983-03-19 480250
> 1983-03-26 480250
> 1983-04-02 479250
> 1983-04-09 484500
> 1983-04-16 495750
> 1983-04-23 497500
> 1983-04-30 497250
> 1983-05-07 496750
> 1983-05-14 484000

Oct 30 02:22 PM

[thiazole:]

How is it relevant? Because the same thing has happened with unemployment claims after EVERY recession. In fact, that one showed a much faster decline in unemployment claims than most. You guys are grasping at straws and trying to make a big deal out of something that always happens at the end of a recession.


On Oct 30 12:39 PM Dave Wrixon wrote:

> And could you post the Fed's lending rate at that time? Was it about
> what it is now? Were they also in stimulation mode back then fiscal
> and monetary? And if not, how is any of this in anyway relevant?
>

Oct 30 03:46 PM

[thiazole:]

Are you saying that inventory contractions haven't played a big role in the number of layoffs this time? Business inventories have fallen by about $200 billion over the past year. How many people had to lose their jobs to create an inventory deficit like that? And how many people will need to be employed again to stop the contraction in inventories?


On Oct 30 02:22 PM Edward Harrison wrote:

> It's a bit of apples to oranges given how much more heavily geared
> the economy was to manufacturing. That meant heavy layoffs due to
> the inventory cycle. Moreover, what you have to look at is net jobs
> i.e. Non-Farm Payrolls (NFPs). I have posted often that it is the
> lack of hiring which makes a 500K or 530K number deceptively high.
>
>
> What I have said before is that we want to see claims declining more
> rapidly so that the benefit of stimulus and cyclical factors will
> still be boosting the economy before the employment situation takes
> its toll and leads to a double dip.
>
> I expect us to shed jobs into Q1, so that is consistent with 1983.
> Beyond that and you're in murky water.
>
> On Oct 30 10:29 AM thiazole wrote:

Oct 30 03:52 PM

[Ricard:]

I agree with this comment. According to Bloomberg, inventories are slimming down, meaning that it's quite possible it will cause an upside surprise to employment soon.

www.bloombeg.com/apps/...


On Oct 30 03:52 PM thiazole wrote:

> Are you saying that inventory contractions haven't played a big role
> in the number of layoffs this time? Business inventories have fallen
> by about $200 billion over the past year. How many people had to
> lose their jobs to create an inventory deficit like that? And how
> many people will need to be employed again to stop the contraction
> in inventories?

Oct 30 07:39 PM

[Old Trader:]

Regarding the outlook improving because of inventory re-stocking;

A commentor on a different article on SA offered up an interesting analogy that suggests there might well be less to this than supposed. You are a car dealer with a lot chock full of cars, teetering on the verge of bankruptcy, when C4C comes through, and you manage to mostly sell out your inventory, thereby saving you. Would you restock to previous inventory levels? I suspect not....or if you did, you probably DESERVE to go under. Granted, the C4C thing is an extreme example, but I'd suggest the underlying premise might very well be sound.

Elsewhere, I heard/read that the three areas showing job growth are education, healthcare, and government jobs. Education is a good and noble thing, and we probably DO need more doctors, nurses, medical techs, etc. It should be noted however, NONE of the three categories actually "make" anything.

Oct 31 03:27 PM

[Dialectical...:]

I think the level of debt and pressure on assets (declining house prices, declining 401k balances, etc.) make this a little different from 1983. You could get by with one member of the family out of work if there was not the crushing debt that so many are experiencing now. Additionally, the amount of underemployment is part of the same conversation. On a household by household basis there only needs to be one good wage earner to get by in lean times, but the wage earners in many families are now working 30 hour jobs at Dunkin Donuts instead of 40 hour jobs at IBM (I live in an IBM town and this is certainly fact where I live). So while there may be cause to think that unemployment is not unprecedented during this recession, I think the drag it will place on any potential recovery is larger than some think.

On Oct 30 03:52 PM thiazole wrote:

> Are you saying that inventory contractions haven't played a big role
> in the number of layoffs this time? Business inventories have fallen
> by about $200 billion over the past year. How many people had to
> lose their jobs to create an inventory deficit like that? And how
> many people will need to be employed again to stop the contraction
> in inventories?

Oct 31 07:14 PM

[Obamitall:]

Those numbers are irrelevant in that they do not account for the fed policy in place at the time. Lower taxes, business friendly climate, etc.
Was it called Reagonomics?


On Oct 30 10:29 AM thiazole wrote:

> The official end of the 1982 recession was Nov 1982. And it was
> obviously sustainable since we saw very strong growth afterward for
> most of the next 9 years. So if you are correct, then that SMALLER
> labor pool back then would be even MORE devistated by these kinds
> of numbers. Yet, those kinds of number persisted well into 1983
> as can be seen below (data obtained from research.stlouisfed.or...).
>
>
> 1982-11-06 626250
> 1982-11-13 612000
> 1982-11-20 600500
> 1982-11-27 594250
> 1982-12-04 586250
> 1982-12-11 569750
> 1982-12-18 554500
> 1982-12-25 523750
> 1983-01-01 518000
> 1983-01-08 512250
> 1983-01-15 503000
> 1983-01-22 500500
> 1983-01-29 492750
> 1983-02-05 490500
> 1983-02-12 492250
> 1983-02-19 494250
> 1983-02-26 488750
> 1983-03-05 487250
> 1983-03-12 484500
> 1983-03-19 480250
> 1983-03-26 480250
> 1983-04-02 479250
> 1983-04-09 484500
> 1983-04-16 495750
> 1983-04-23 497500
> 1983-04-30 497250
> 1983-05-07 496750
> 1983-05-14 484000

Nov 02 07:04 AM