Steven Hansen's  Instablog

The buzz this week was jobs and the fiscal cliff. I covered the fiscal cliff in my weekly article published around the internet. I covered the jobs releases also - but I will use this post to tie jobs together.

I would ignore the November jobs data. There are too many question marks and inconsistencies - and this is not a condemnation of the data but sometimes even the best methods show that 1 + 1 = 3. It is best to sit back on those occasions, and have a beer and discuss football.

• the primary reason for ignoring the data is Hurricane Sandy. The BLS says they don't believe it impacted the data, while ADP says it did. I say that there was no way it did not impact the data - although the effects may be balanced. You can read my analysis of the ADP report and the BLS report.
• something was nasty in the BLS data which i will talk about in a post on Monday. The gain in retail sales employment was the largest in history. This just does not make sense in a soft economy. It also does not correlate with temporary job gains which was very low historically.
• in any event, read this post which summarizes the issues facing this jobs report.

The Econintersect economic forecast for December 2012 shows weak growth. The underlying dynamics continue to have a downward bent. There are recession markers still in play, and one of our alternate methods to validate our forecast is recessionary. All in all, not a great forecast - but not one which would cause you to jump out the nearest window either.

ECRI believes the recession began in July 2012. ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value is enjoying its fourteenth week in positive territory (but slightly improved from last weeks ten week low). The index is indicating the economy six month from today will be slightly better than it is today.

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Initial unemployment claims fell again from 393,000 (reported last week) to 370,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - rose again from 405,250 (reported last week) to 408,000. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge. This is the highest 4 week average in over one year, and is 4.3% above the claims level of the same week one year ago.

(click to enlarge)

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Bankruptcies this Week: Ahern Rentals

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements (where the economic intuitive components indicate a moderately slightly expanding economy).
• ISM non-manufacturing came in stronger, and the subindex which highly correlates to the economy was even stronger.
• Construction spending (although a shadow of its former self) continues to grow.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.