Jobless Claims: A Spike Ends the Debate

No one should be surprised by Thursday morning's discouraging news on weekly jobless claims, which surged to 407,000 last week. This is the highest they have been since the anomalous but temporary spike in September 2005 directly after Hurricane Katrina. The warning signs have been bubbling for months, as we, and others have pointed out. And so, this time, the rise in new filings for unemployment insurance is a reflection of a weak economy rather than a one-time weather event. In short, there will be no sudden and sharp drop in new claims this time, as there was in 2005.

As our chart below reminds, the rise in jobless claims has been unfolding since late last year. The message in the graph is clearly that the tide has shifted in no uncertain terms. No one can say that jobless claims are still in a range that reflects a healthy economy. Those days are over. The front line of optimism now turns to looking for light at the end of the tunnel. As we discussed last Friday, the recession is here and the debate necessarily moves to the questions: how long, how deep?

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Fed Chairman Bernanke set the official tone on Wednesday, when he said "recession is possible" in testimony on Capitol Hill. By this editor's reckoning, Bernanke was being charitable. As the above chart suggests, the odds of sidestepping economic contraction look virtually nil. Yes, anything's possible. But if we look at a broad range of economic indicators in addition to Thursday's jobless claims report, it's hard to miss the obvious trend.

It'll take time to get a handle on how short and shallow (or long and deep) the recession will be. Given the lag in economic data, the coming weeks and months are likely to provide ongoing confirmation of what's already obvious. As a result, the focus turns to the various leading economic indicators for clues about where the cyclical trough lies and what will spark an eventual upturn. But let's not strain our eyes at this point; it's too early for that.

For the moment, patience and prudence, along with a modest dose of opportunistic buying sprees here and there are still a strategic-minded investor's best friends.

Comments

[Don Brown]

Economic and Unemployment Woes
By Don Brown

In looking into the history of the Great Depression, this is where America is heading, all economists talk about Recession as they don’t want to expose the reality of a Depression.
No one wants to admit, our economic downfall is that we the American Big Business and Politicians have permitted this by diluting our manufacturing in America to having manufacturing and service job overseas, all because of greed on the bottom line of Big Business. Not thinking of what the future consequences may become.
For the past 8 years the Republican regime in Washington has consistently permitted the outsourcing of employment overseas. The results of massive unemployment of our service and manufacturing workers here in America, as companies are downsizing to ship service and manufacturing jobs to other countries. This outsourcing includes financial institutions of service jobs with all of our personal information which could expose each of us to the possibility of identity theft.
The reality of unemployment is that the figures that the US Employment and Training Center calculate is based upon those individuals that are on the rolls of unemployment. What about all of the displaced workers that have been off the rolls of unemployment for 1 to 5 years that are still looking for employment or have had to start their own business because of the inability to find employment.
In addition as to the industrial real estate market many buildings that were once occupied are now empty and this is not just in the ‘Silicone Valley’ area of California it is across America.
The final results of the outsourcing of service and manufacturing jobs to other countries has resulted in the downsizing of our economy which has resulted in the ‘residential foreclosure’ boom across America. Of course the economists indicate that the ‘residential foreclosure’ boom is because of the types of loans in which was developed for first time homeowners to be able to purchase homes. This is only part of the problem, the primary problem is that of outsourcing of service and manufacturing jobs to other countries.
By outsourcing we have had considerable losses due to the lack of ‘tax base’ dollars resulting in the inability of the maintenance of roadways, bridges, buildings and parks.
It is common knowledge whether in Government, Business or Home you don’t dilute your economic and structure of those you serve by providing your competition the advantage of your own infrastructure. By so doing you damage the economic infrastructure of those you serve.
It makes no difference which party gets into office it is going to take at least 3 to 4 terms of the Presidency to bring America back into becoming solvent again with a stronger economy and that is we the American people can find a President that is capable. Politicians when running for office promise the moon then once in office reality sets in.
What we need as a President for all future terms, those who have knowledge as to how business works, common sense and most of all diplomacy in working with their piers in Congress and the Senate and most of all with Government Officials of other countries.
The most important key role of the Presidency in serving the people is to have enough knowledge and the diplomacy to work with those in Congress and the Senate in order to develop a working plan for America in order to bring America back into solvency.
• By developing solutions in the rebuilding efforts of a strong economy,
• Building manufacturing for the ability to ‘buy America made products’
• Removing the ability of companies and government of outsourcing jobs to other countries by ‘imposing penalties’ to those companies or government entities in so doing.
In working with Government Officials of other countries we cannot have the dogmatic attitude that their government has to conform to ours. The President needs to realize first and foremost that other governments have their own policies that have been laid down for centuries just as ours have been.
The President needs to have the diplomacy in working with our neighbors of other countries regardless of where they may be located as partners in the developing of benefits of all people. However it is not the Presidents job to tell other government officials of other countries what to do or what not to do. With any issue there can be positive results with the proper diplomatic approach.
The problem we face today is that we have given America away to the outsourcing of service and manufacturing jobs to other countries and our President doesn’t have the knowledge of diplomacy in working with other Government Officials of other Countries.
Until we have ‘Change In Government’ not just in the Presidency but in the ‘diplomatic and economic’ development of our infrastructure we will continue to have “Economic and Unemployment Woes” and a continued failed America.

[gordon]

Today's CORRUPT -80,000 job number included 142,000 PHANTOM BIRTH/DEATH jobs, including 28,000 CONSTRUCTION jobs added.(link below) Add these back in, and subtract the 16,000 GOVERNMENT jobs, = -158,000, add the minus 80K= total was a job loss of 238,000 jobs.
www.bls.gov/web/cesbd....

[iThinkBig]

Perhaps some future American government will build the Apollo Program of energy independence and we will give the global consumer what they want and need. Until then, the top 1% will grow much richer, the other 2% will get by just fine and the other 97% will be be serfs. Many are to blame. Bad fiscally irresponsible government not caring about the little guy, the little guy spending way beyond means and big business outsourcing a ton of wealth overseas. It will get better as India, China EU etc start up and buy empty assembly factories here and pay workers $9 an hour with no benefits. The 97% of America will be working much harder just to eat and have a roof over their heads in the next several years.