Thursday, April 07, 2011

Jobless Claims Remain Below 400,000 for 6th Week

The Department of Labor reported today that initial jobless claims fell by 10,000 for the week ending April 2, bringing the four-week moving average down by 5,750 to 389,500 (see chart).  For the first time since July 2008, the four-week average for jobless claims has remained below the benchmark 400,000 level for six consecutive weeks, and provides additional evidence that conditions in the labor market are gradually improving. 

According to Reuters:

"New U.S. claims for unemployment benefits fell slightly more than expected last week, according to a government report on Thursday that pointed to firming labor market conditions. Initial claims for state unemployment benefits slipped 10,000 to a seasonally adjusted 382,000, the Labor Department said. Economists polled by Reuters had forecast claims falling to 385,000. The four-week moving average of unemployment claims -- a better measure of underlying trends - fell 5,750 to 389,500."

18 Comments:

At 4/07/2011 11:21 AM, Blogger Benjamin said...

The Bush Recession was nearly fatal, but the worst is over now.

Boomtimes ahead, globally, and for decades.

The only death trap I see is more financial meltdowns, ala Long-Term Capital Management, Lehman Bros., AIG, large banks. I wonder if there is a way to firewall off such meltdowns.

 
At 4/07/2011 11:22 AM, Blogger VangelV said...

Let me throw a bit of cold water on this report.

Obama is projecting a budget deficit of $1.6 billion. He is in a fight with Republicans who want to cut that deficit by 4%, twice of what he is proposing. Given the current environment estimated have the federal debt growing by another 45% or so in the next five years. The duration of treasury debt is less than three years. That would mean that the government would have to fund debt coming due in addition to the more than $100 billion a month it needs to borrow due to the deficit.

The changes in the price of gasoline means that the average family will have to spend around $750-$800 more this year than last. That will not help discretionary savings and the jobs that depend on it.

And as we look at the data we find that one in four families has a negative net worth and that one in 45 families is in foreclosure. To help them the Fed is busy destroying whatever purchasing power the USD has left. On the whole, that is not good for long term job prospects

 
At 4/07/2011 11:27 AM, Blogger VangelV said...

Boomtimes ahead, globally, and for decades.

With Obama making drunken sailors look prudent, more than six million able bodied Americans giving up looking for a job, and QE3, QE4, QE5, etc., waiting in the wings the future is not as bright as you might think that it is.

The only death trap I see is more financial meltdowns, ala Long-Term Capital Management, Lehman Bros., AIG, large banks. I wonder if there is a way to firewall off such meltdowns.

The solution is easy. End the Fed and go to free banking where bad decisions are punished by the markets. Denationalize money and let the market choose the appropriate monetary media and mechanisms. But that solution will not be tried because it would take away from governments the power to rob savers through inflation and to fund a bigger and bigger intrusion into the economic and social spheres by being able to borrow.

 
At 4/07/2011 1:17 PM, Blogger Benjamin said...

Vange-

The gloom-and-doom case made more sense two years ago than now.

On banking? Not sure. People are not always rational investors--there were booms and busts and investment fevers before the United States or Fed existed, and there will be same 200 years from now, when likely the USA will no longer exist. The Great depression started when we were on gold standard.

The problem is with banking--busts means banks get wiped out. When banks get wiped out, you get bank runs, panics, frights etc.

The globe has seen a wonderful expansion of income and wealth in the last 40 years, and I expect it to continue--and no nation is on a gold standard. I only expect the past is prologue. I am not predicting an exotic future, only a continuation of the banal: regular progress.

Indeed, the only people in poverty today are in repressive, non-free market countries, or countries where hours worked per day are very low. Even nations with limited natural resources--a Sweden, Japan, Iceland, etc--have prospered, none on the gold standard.

Wealth comes from human behavior, not a yellow metal.

 
At 4/07/2011 1:33 PM, Blogger juandos said...

pseudo benny still proving to the world he's clueless...

This should be easy to understand: Bush Deficit vs. Obama Deficit in Pictures

BTW Trump is doing an investigation of your boyfriend...

 
At 4/07/2011 2:58 PM, Blogger Kevin said...

"pseudo benny still proving to the world he's clueless..."

juandos,

At least he doesn't post 3 year old Bloomberg articles about layoffs and try to pass them off as though they are current. Talk about the pot calling the kettle black. Note your comment at the bottom:

http://www.blogger.com/comment.g?blogID=28997633&postID=6388230670623732785

 
At 4/07/2011 5:30 PM, Blogger Dr. T said...

"... provides additional evidence that conditions in the labor market are gradually improving...."

It provides no evidence that the labor market is improving. The fact that fewer people lost jobs in the past four weeks means nothing without knowing how many people were hired. I suspect the number hired during those four weeks is less than 385,000, which means that net employment is falling.

 
At 4/07/2011 5:44 PM, Blogger Benjamin said...

Juandos-

At least I have a reading audience--of one. You.
Thanks for noticing.

BTW, I am eager to read other points of view. But why all the ad hominem commentary? The fact that I have a different point of view than you means you must become insulting?

 
At 4/07/2011 6:00 PM, Blogger PeakTrader said...

Dr T, this may signal good times ahead:

Retail Sales For March
Apr. 7, 2011

Victoria's Secret sales up 19%.

Also:

Limited Brands sales up 14%.
Costco sales up 13%.
Macy's sales up 0.9%.

Not all good news:

Gap sales dropped 10%.
Target sales down 5.5%.

"Bad weather, higher gasoline prices and a later Easter were expected to result in the first monthly retail sales decline since 2009, but consumers continued to spend in March, giving retailers a modest 1.7% gain over the same period last year."

 
At 4/07/2011 6:55 PM, Blogger PeakTrader said...

Stores turn in surprisingly strong sales for March
April 7, 2011

There are signs now that the cycle is taking off. Ajay Banga, the CEO and president of MasterCard Inc., told The Associated Press that there's "something changing" in American spending habits.

"The 90 percent of the people who are employed, compared with the 10 (percent) who are not, no longer believe that their jobs are at risk," Banga said. "And their willingness to spend has changed compared with six or nine months ago ... when there was a fear."

Americans have more money to spend because of a two-percentage-point cut in the Social Security payroll tax, which will provide most households an additional $1,000 to $2,000 this year. The IRS had also paid out $206 billion in tax refunds through March 25, 1.1 percent more than at the same point last year.

The economic recovery keeps defying expectations and getting stronger. Robust consumer spending in March is the latest sign that the rebound is entering a self-reinforcing cycle of improvement.

 
At 4/07/2011 10:04 PM, Blogger VangelV said...

The gloom-and-doom case made more sense two years ago than now.

Not from where I am standing. There is a lot more debt outstanding today than there was then and two years ago there was hope that the necessary decisions on letting the bankrupt financial players go under would be made. It wasn't so now we have the USD in serious danger of becoming the next Peso.

On banking? Not sure. People are not always rational investors--there were booms and busts and investment fevers before the United States or Fed existed, and there will be same 200 years from now, when likely the USA will no longer exist. The Great depression started when we were on gold standard.

Not exactly. Most countries were off the gold standard and the Fed was busy trying to save the reputation of the Bank of England. The 1920s saw some of the greatest innovations in history yet the price decreases that should have taken place never did because of the Fed's liquidity issues. The depression was caused by a credit induced boom. There cannot be such a boom if the central bank's can't produce money out of thin air.

The problem is with banking--busts means banks get wiped out. When banks get wiped out, you get bank runs, panics, frights etc.

The problem is a fiat based fractional reserve system. What we see is inevitable.

The globe has seen a wonderful expansion of income and wealth in the last 40 years, and I expect it to continue--and no nation is on a gold standard. I only expect the past is prologue. I am not predicting an exotic future, only a continuation of the banal: regular progress.

Actually, the last 40 years has given us the failure of a number of fiat currencies and has devastated savers. Who wants to live in a world without a stable purchasing power and a monetary media that is not a store of value?

Indeed, the only people in poverty today are in repressive, non-free market countries, or countries where hours worked per day are very low. Even nations with limited natural resources--a Sweden, Japan, Iceland, etc--have prospered, none on the gold standard.

They would have done much better with a freer economic system and a gold standard. All those countries are broke and cannot meet their long term pension obligations.

Wealth comes from human behavior, not a yellow metal.

Yes wealth does come from human action. But the yellow metal protects that wealth in ways that fiat money never can.

 
At 4/08/2011 2:46 AM, Blogger PeakTrader said...

VangelV, U.S. purchasing power has increased, because real incomes increased. Per capita assets and goods both increased over time.

Also, you're blaming the Federal Reserve (or monetary policy) for problems created by the federal government (or fiscal policy). Moreover, you're mixing government debt and household debt.

Sustainable growth would've been maintained if the federal government "refunded" dollars to the private sector (i.e. the dollars that were drained from trade deficits) through tax cuts instead of spending or diverting those dollars.

 
At 4/08/2011 8:22 AM, Blogger VangelV said...

VangelV, U.S. purchasing power has increased, because real incomes increased. Per capita assets and goods both increased over time.

The USD has lost more than 90% of its purchasing power since the creation of the Federal Reserve with most of the decline coming after the 1971 bankruptcy.

Also, you're blaming the Federal Reserve (or monetary policy) for problems created by the federal government (or fiscal policy). Moreover, you're mixing government debt and household debt.

The Fed makes the government's spending possible by its liquidity injections. The large booms and busts are rooted in massive credit expansion. Had the government been forced to finance its spending out of actual savings they would not have been possible.

Sustainable growth would've been maintained if the federal government "refunded" dollars to the private sector (i.e. the dollars that were drained from trade deficits) through tax cuts instead of spending or diverting those dollars.

It would have been maintained if the Fed did not create purchasing power out of thin air and by doing so diluted the purchasing power of savers and investors. It is the Fed that is primarily responsible for the transformation to a casino economy. By resorting to printing over and over again it permitted government to grow from less than 10% of GDP before its formation to more than 40% of GDP today.

 
At 4/08/2011 9:35 AM, Blogger morganovich said...

"But why all the ad hominem commentary? The fact that I have a different point of view than you means you must become insulting?"

talk about the pot calling the kettle black.

you use ad hominem all the time benji. then you get upset if anyone does it back to you.

that is called hypocrisy.

pick a side of the street and live on it.

cluck, cluck ad hominem chicken little.

 
At 4/08/2011 3:36 PM, Blogger PeakTrader said...

VangelV, you're laying blame at the wrong place. The Fed has generally done an excellent job smoothing-out business cycles, through the creation and destruction of money, to raise U.S. living standards at or near an optimal rate (and it doesn't micromanage the economy with its crude tools).

The federal government created an enormous unfunded social program to help low income people buy houses. The program spun out of control and caused the financial crisis and recession. The federal government decided to help lower income people without paying for it.

 
At 4/08/2011 4:24 PM, Blogger VangelV said...

VangelV, you're laying blame at the wrong place. The Fed has generally done an excellent job smoothing-out business cycles, through the creation and destruction of money, to raise U.S. living standards at or near an optimal rate (and it doesn't micromanage the economy with its crude tools).

The Fed is the blower of serial bubbles, continual counterfeiter, and meddler. It does not smooth out bubbles but creates them. By preventing the corrections afterwards it only sets the economy up for an ever bigger crash after the next bubble.

The federal government created an enormous unfunded social program to help low income people buy houses. The program spun out of control and caused the financial crisis and recession. The federal government decided to help lower income people without paying for it.

Yes, the federal government did all that. But the system could not work if the federal government had to pay for everything with real money, not new credit provided by the Fed. What the US, and the rest of the world needs, is a commodity based monetary system that forces everyone to live within their means.

 
At 4/09/2011 2:41 AM, Blogger PeakTrader said...

VangelV, we've had this conversation before and it seems you continue to confuse "asset bubbles" with economic cycles (of goods and services).

Also, you seem to believe asset bubbles are the same, and caused by the same set of factors, or one factor, i.e. the Fed.

Over the economic expansion of the 2000s, the U.S. had up to $800 billion a year trade deficits. Those dollars went to foreigners, who bought mostly U.S. Treasury bonds.

Most of those dollars didn't go back to the people who spent them on foreign goods. Too many dollars were diverted into the housing market and into reducing federal budget deficits.

With the Fed tightening the money supply at the same time, a liquidity crisis took place.

The Fed was behind the curve easing the money supply and the federal government didn't fund, or refund, the economy sufficiently.

 
At 4/19/2011 10:04 AM, Blogger VangelV said...

With the Fed tightening the money supply at the same time, a liquidity crisis took place.

The Fed was behind the curve easing the money supply and the federal government didn't fund, or refund, the economy sufficiently.


You miss the fact that the Fed created the bubble by dropping interest rates to less than 1% in order to prevent the liquidation that was necessary in the aftermath of the IT bubble. It aided and abetted the housing bubble speculation by allowing speculators to borrow at a low cost and forced savers out of their savings instruments by reducing returns to below the inflation rate.

You can make all the apologies for the Fed that you want but you can't change the fact that the Fed's critics got the predictions right while the useful idiots who went along with the mainstream economic mythology got caught by something that they did not see coming.

 

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