Jobless Claims Drop Steeply To a 22-Week Low
The Department of Labor reported today that initial claims for unemployment insurance fell by 52,000 to a much lower-than-expected 565,000 (seasonally adjusted) for the week ended July 4, from 617,000 the previous week. It was the lowest level of weekly claims since January. Analysts polled by Reuters had forecast claims to drop to 605,000 from a previously reported 614,000.
The 4-week moving average of 565,000 claims (adjusted to smooth volatility in the data) also fell to the lowest reading since January, reaching a 22-week low (see chart above).
5 Comments:
Has anyone mentioned that higher unemployment rates may be healthy for the economy?
How many years now has the economy been overheated?
Laobor shortages drive illegal immigration.
Inflation is a real problem even at low rates.
Who remembers when a first class postage stamp was 2 cents?
Waht is needed is for governments to acclimate to a new equilibrium which assumes a higher unemployment rate.
At this point, I would not put much stock in the latest initial claims data. The DOL always has a tough time around seasonal adjustments around holidays.
I'll also repeat my expectation that moving forward, we will see new highs for the 4-week moving average by mid-August. Ywo factors will contribute to this: 1) the minimum wage increases July 27. Many small businesses struggling to make it will let their employees go. 2) Many states and cities have started a new fiscal year effective July 1. With the sharp drop in revenues, I expect to see states cut back on their payments to cities/counties and to contractors. This will cascade into additional job losses.
Thus far, the sharp rise in government spending has masked a much larger contraction in the real economy (let be honest, an EPA bureaucrat who develops a new way to tax cow farts hardly qualifies as a "product" in GDP, but gets counted the same a real product in the reported number). GDP without including government spending has contracted about 13% in the past year.
True unemployment rate already at 20%
Over the years, the government has changed the way it counts the unemployed. An example of this is the criticized Birth-Death Model which was added in 2000. The model is designed to account for the birth and death of businesses and the resultant lag in survey data. Unfortunately, the model doesn't work that well during economic contractions (like we have now) and consistently overstates the number of jobs being created each month.
John Williams of Shadow Government Statistics specializes in removing these questionable tweaks to the government's statistical data to better align current numbers with the methodology used to gather historical data. After reviewing the data, Williams believes that "the June jobs loss likely exceeded 700,000." David Rosenberg of Gluskin Sheff notes that the fall in the number of hours worked in June (to a record low of 33 per week) is equivalent to a loss of more than 800,000 jobs.
There are similar issues with the way the unemployment rate is measured.
MSN Money
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I've posted this comment before, and you've refused to respond Mark.
This is intellectually dishonest reporting and you know it.
Jobless claims did not drop. Continuing claims rose, and were 170k higher than expected.
Initial claims dropped. Total claims did not.
Further, you state moving average is 565,000 - moving average of INITIAL claims is actually 606,000. I'm not sure who else would charechterize a change of less than 1.6% as a "steep drop".
Care to respond? or just sit on the sidelines cheerleading?
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