U.S. Weekly Jobless Claims: Why You Can't Trust Them 10 comments
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The market was ecstatic with the November 25th U.S. weekly jobless claims figures. According to the report the number of Americans filing for unemployment fell 35,000 from the week before, dropping to 466,000. Bullish headlines such as "Jobless Claims Plummet to 14-Month Lows" were all over the web. Commentators immediately started gushing about unemployment turning around and job gains being just around the corner. Stock futures perked up, the U.S. dollar continued a sell off already well underway, and gold which had been rallying strongly turned down on the news.
As for myself, I stopped paying attention about 15 years ago to the weekly jobs claim number the week of the release. Why? At that time, there was also an unexpected major drop in the claims figures. The markets went crazy on the news. One week later, the number was revised sharply upward with a statement from the BLS (Bureau of Labor Statistics) that one state had not gotten their figures to the department a week earlier so they hadn't been included in the totals. While the BLS knew this at the time, it did not inform the public of this important inaccuracy. The error was quite substantial as well, since the state that didn't report was obviously California. It should also be noted that the November 25th report was released on a Wednesday, one day earlier than usual, because of the Thanksgiving holiday on Thursday. It is quite possible not all the state data came in early enough to be included.
At the same time the weekly jobless claims were released, the monthly Durable Goods and Personal Spending reports also came out. Durable goods declined 0.6% for October indicating a weakening economy. A drop in defense spending was blamed (just another form of government spending propping up the U.S. economy). However, orders for cars, machinery (needed for factories), computers and communication equipment (both needed for offices) also fell. Personal spending was up 0.7% in October. This is hard to believe considering U.S. consumer credit has had a major drop in the last year and the over 10% unemployment rate has negatively impacted consumer income. Where is the money coming from for the increases in spending?
The most significant market action on the release of all this data was the falling U.S. dollar. The trade-weighted dollar cut through the recently established 75.00 support level and traded as low as 74.40 in early morning New York trading. There is a strong band of support between 72.00 and 74.00. Expect a bounce off the top of that band initially, with an eventual test of the 2008 low around 71.50. While the dollar hit another yearly low, spot gold hit another new all-time high, trading up to $1183.80. Expect to see more of the same in the future.
Disclosure: Long gold, no dollar positions. Long time critic of the BLS.
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look at non seasonally adjusted numbers back 5 years you would see
there is a particular shape to non seasonally adjusted jobless claims
numbers.. we are not seeing that this year.....you are going to be surprised as these numbers will continue to drop.....
Remember back in September BLS announced it's stats out by some 800,000 jobs, that were counted in - instead of out? They are doing nothing about this discrepancy until February 2010, when it will be included in their updated revision.
No. I'll believe these latest numbers when they have been baked in the oven a little longer!
The stimulus has been pumped into the coffers of the state to prevent state jobs from declining and to extend unemployment benefits. These calculated two ways, new claims and those on extended benefits that would normally have expired their claims. The 20 week extended benefit bandaid has over 4 million people on life support.
Many states are just starting their slashing of jobs, recently Arizona has announced cuts. These are the high paying jobs that make a huge difference.
This is not over by a long shot, 48 of the states can't balance their budgets, and have tremendous tax receipt shortfalls. This can only result in more pain.
On Nov 25 12:31 PM Donald Ingram wrote:
> The BLS numbers are highly suspect. Just the birth/death model adjustment
> is a complete joke now, having added 80,000 new jobs per month?
>
> Remember back in September BLS announced it's stats out by some 800,000
> jobs, that were counted in - instead of out? They are doing nothing
> about this discrepancy until February 2010, when it will be included
> in their updated revision.
> No. I'll believe these latest numbers when they have been baked in
> the oven a little longer!
On Nov 25 12:32 PM conceptwizard wrote:
> Job creation in the private sector is the real issue, at zero increase
> in 10 years. Big Government is controlling the job numbers right
> now.
>
> The stimulus has been pumped into the coffers of the state to prevent
> state jobs from declining and to extend unemployment benefits. These
> calculated two ways, new claims and those on extended benefits that
> would normally have expired their claims. The 20 week extended benefit
> bandaid has over 4 million people on life support.
>
> Many states are just starting their slashing of jobs, recently Arizona
> has announced cuts. These are the high paying jobs that make a huge
> difference.
>
> This is not over by a long shot, 48 of the states can't balance their
> budgets, and have tremendous tax receipt shortfalls. This can only
> result in more pain.
There are no consistently good measures of underemployment but it seems widespread.
Finally there is the hidden issue of people finding replacement jobs but a substantially lower total compensation. Statistically an inferior replacement job is indistinguishable for a comparable replacement job.
2. What matters, of course, is after tax disposable income( from all sources, not just wages) and while this income is splendid for the top 5 % of Americans it is compressing visibly for the next 70%. For the bottom 25% income from real work is almost non-existent: it is income from non-work and non- economic contribution and negative value added-----transfer payments and assorted gifts-----that comprises most of the cash and kind intake and while this intake is rising its purchasing power is declining.
3. It is not difficult to believe that spending is up: when people stop paying mortgages and rent and slow pay or underpay utility bills they can find cash for consumer goods and services( utilities recognize revenue upon billing, not upon receipt of money from customers...a utility can report rising revenue, as billed, even though cash revenue, as received, is declining....the difference becomes a regulatory "asset" )...this "found" cash is, of course, just another form of theft.
Mr wizard take me home i dont want to rely on government for important economic data anymore...
or how robert rausch in the clinton administration reworked unemployment numbers.
the list goes on and on.
our government has a long history of cooking the books to influence the mindless masses.
but you have to remember that markets move based on this nonsense,so what are you going to do ?
be mad because the info is intentionally misleading,or take advantage of the market movement?
p.s. if you go to the library look up some of the old nonfiction books by Ayn Rand-there is a foreward on economics written by her protege....Alan Greenspan!
On Nov 25 01:30 PM michael rothschild wrote:
> go to your local library and look up some of the old books about
> how alan greenspan did his famous "hamburger for steak" revision
> of CPI.
> or how robert rausch in the clinton administration reworked unemployment
> numbers.
> the list goes on and on.
> our government has a long history of cooking the books to influence
> the mindless masses.
> but you have to remember that markets move based on this nonsense,so
> what are you going to do ?
> be mad because the info is intentionally misleading,or take advantage
> of the market movement?
> p.s. if you go to the library look up some of the old nonfiction
> books by Ayn Rand-there is a foreward on economics written by her
> protege....Alan Greenspan!