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Ignore The November 2012 Jobs Reports

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.

Current ECRI WLI Growth Index

/images/z weekly_indexes.PNG

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.

Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)

/images/z unemployment.PNG

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.

Weekly Economic Release Scorecard:
How to Build a Time Machine
Forexpros Weekly Wrap-Up 07 December 2012
What We Read Today 07 December 2012
ECRI's Weekly Leading Index Growth Index Improves Marginally for w/e 30 November 2012
Preliminary December 2012 Michigan Consumer Sentiment Has Big Drop
BLS Jobs Report Much Better than Expectations in November 2012
Will the 2012 USA Drought Have a Big Impact on Grocery prices?
Infographic of the Day: Can Healthcare Save the Economy?
Saving America, Chinese Style
Joe Sixpack's Situation: 3Q2012 View Updated
Handling Futures Contract Rollovers
ECB: Continued Contraction in 2013
Fed's Balance Sheet 05 December 2012: Balance Sheet Up $2.3 billion
Thinking Through the BLS Jobs Report, View of NFIB and Jeff Miller
Rail Week Ending 01 December 2012: Strange but Good Numbers Overall
What We Read Today 06 December 2012
Insider Trading 30 November 2012: Airgas the Big Seller this Week
01 December 2012 Unemployment Claims: Now 4.3% Higher than Same Week in 2011
Challenger November 2012 Job Cuts Rise Due to Hostess Bankruptcy
Infographic of the Day: The Wealthiest Humans
Developing A New Macro Economics
How to Use the January Effect
Gold's Big Fuss Over Nothing
ISM Numbers Are Weak Before QE3 Cash Begins To Flow
More Bank Fraud Allegations Surface Years After the Fact
HFT Study Pulls Back the Veil and the Bride is Ugly
U.S. Drug Policies: Lessons from Prohibition
The End of Efficiency
What We Read Today 05 December 2012
Manufacturing New Orders Improves, But With Caveats in October 2012
ISM Services Index Moderately Strengthens in November 2012
Nonfinancial Leverage NFCI Again Relatively Unchanged w/e 30 November 2012
Productivity 3Q2012 (Final): Productivity Increase Improved to 2.9%
November 2012 ADP Jobs Up 118,000
Infographic of the Day: Credit Card Usage
WTI Crude Oil To Test $65 Level in 2013
Climate Change and Common Belief
October 2012 CoreLogic Home Prices Show Growing Year-over-Year Improvement
Schauble: Go Slow on Banking Union
About Short and Long Exposure of The Market
Pat Buchanan on His Latest Book, the Failure of Romney and What the GOP Has To Do Next
2013 Gold Price Forecast: Expect Gold to Deliver Another Record-Setting Year
What We Read Today 04 December 2012
October 2012 Philly Fed Leading Index Is Projecting Positive Economic Growth
Should the Fed Keep Paying Interest to Banks on Excess Reserves?
CoreLogic Reports Foreclosure Inventory Down 9% Year-to-Date in October 2012
Stratfor: Egypt and the Strategic Balance
Infographic of the Day: Plastic Bags Are NOT Suffocating the World
Merger Activity Increases Week Ending 03 December 2012
Of What Importance Google vs. Apple in the Grand Scheme of Things?
Fed: Banks are Milking Low Interest Rate Policies; Banks: No Way
Australia: Interest Rates Cut
A Whole Generation of Young Americans Tossed Under the Bus
A Dummy's Guide to Unconventional Monetary Policy
Microcap Risk - Finders Fee Payment To Unregistered Broker Leads To Chapter XI
COT Report Reveals Significant Increase In Yen Net Short Position
Average Gasoline Price Decline $0.042 in Week Ending 03 December 2012
They Won't Be Forgotten
What We Read Today 03 December 2012
Healthy Increase In Construction Spending for October 2012
November 2012 ISM Manufacturing Survey Shows Sector Contraction
Infographic of the Day: Joe Sixpack's Alternative Banking
Forward Markets: Macro Strategy Review for December 2012
"Eureka" Says Eurozone
China: PMI Returns to Expansion
Frank Li Publishes Book
Ellen Brown Speaks in Scotland
2013 Bond Market Forecast: Is the Bond Bubble Finally About to Burst?
The End of Growth?
First Time Unemployment Claims Drop After Sandy, But Jobs Growth Rate Slows
What We Read Today 02 December 2012
The Workings of Analogs
Sunday Economic Comedy: Michael Moore Trying to Stop Darth Vader Destroying Jobs
Infographic of the Day: The Key to Happiness at Work
BEA Raises 3rd Quarter 2012 GDP Growth Estimate to 2.67%
NASA Discovers Potable Water on Mars
Teaching Macroeconomics to Undergraduates in The Post-Crisis Era
What We Read Today 01 December 2012
Saturday Economics Comedy: Banker Superheroes Saving The World for Themselves
Making The Economy Grow by Adding More Debt
A Tale of Two Countries
Debt Crisis Solutions are Leaving Investors Behind

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