Another Economic Disappointment: Initial Claims At 422K On Expectations Of 417K

Tyler Durden's picture

Another day, another disappointment in the economic front, where over the past week there has not been one consensus beat. Either tomorrow's NFP number will be the biggest headfake, and the Birth Death adjustment will blow the hinges off the market, or the number will be a total disaster, as needed for QE3. For the week ended May 28, initial claims were 422,000, higher than expectations of 417,000, down from an upwardly (naturally) revised 428,000 (previously 424,000). The 4-week moving average was 425,500, a decrease of 14,000 from the previous week's revised average of 439,500, now that the outlier whopper from a month ago drops out of the moving average. The states with the biggest increase in claims was California, with +7,053 layoffs in the service industry. Continuing claims were also higher than expectations of 3,675K, printing at 3,711K, but, you guessed it, it is a drop from the prevoius number which was revised from 3,690 to, wait for it, 3,712K. Those rolling off benefits and hitting the 99 week cliff naturally gets bigger and bigger as the depression progresses, with 5k less under EUCs and Extended Benefits programs. Elsewhere, US Nonfarm Productivity Q/Q was 1.8% vs. expectations of 1.7% (Prev. 1.6%), while Unit Labor Costs missed expectations of 0.8%, coming at 0.7%, and down from 1.0% previously. Altogether another set of weak data as everyone now focuses on tomorrow's critical NFP number: as a reminder it was the horrible August 2, 2010 NFP data which set off QE2.

According to Goldman, there were no special factors on which to blame the drop:


1. Initial jobless claims fell to 422k in the week ending May 28 from 428k in the previous week. However, the level of claims was higher than the consensus forecast (Median: 417k). The four-week average fell to 425k from 440k previously. Claims are now about 30k higher than the average level in February. In contrast to the sharp increase in late April, today's level no longer appears obviously related to special factors-such as auto production cuts, poor weather, and seasonal adjustment bias (based on the mix of states that have seen claims increase). At the same time, the current level of claims is also probably consistent with ongoing growth in nonfarm payrolls, and is therefore less discouraging than many recent reports. We are holding our forecast for May nonfarm payroll growth at 100k.

2. Separately, the BLS revised up its estimate of Q1 nonfarm productivity growth to 1.8% (qoq ar) from 1.6% previously. Growth in unit labor costs was revised down to 0.7% from 1.0% previously.

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djsmps's picture

The Marketwatch headline this morning:

Dow 20,000, here we come
A day after the Dow saw its worst single-day point drop since June 2010, James Altucher makes the
case that it's not surprising that the market needs a day or two before blasting off to ... Dow 20,000.

Herne the Hunter's picture

I'm waiting for Dow 10^20000

Herne the Hunter's picture

And a HAARP gun to spread benjamins across the atmosphere

SheepDog-One's picture

DOW 500,000,000!!! I guess its possible with the way the Wall St criminal cabal is printing and pumping these bubble markets!

mattwett12's picture

Well if you look at a long enough trend and draw a line, there is no reason the DOW couldn't hit that amount right?

oh_bama's picture

Just as Zerohedge,BY DESIGN, needs to mention this upward REVISION TWICE A WEEK as if no one knows about it, CLOWNS at marektwatch are PAID to PUMP STOCKS ALL THE F**KING TIME

ZakuKommander's picture

Actually, mentioning the upward revision twice a week has become a ritualistic continuing joke among buds, a bond among sister and brother ZHers, something that never fails to evoke a good natured snicker . . .

mayhem_korner's picture

Which can be arrived at in one of two ways...

a) DXY at 40

b) P/E ratios to 250 (pandemic of investors on hashish)

Herne the Hunter's picture

He sees Dow 20k within 12 to 18 months... citing iPad sales as a harbinger of "innovation"... 


bonddude's picture

Then he must also see the dollar not being fit to wipe my ass with.

Dr. No's picture

I mean why not?  The FED is not the monoploy holder of trying to pump stocks.  A head line like that might keep some sheeple from selling for a day or two, giving valuable time for the HFT to reset their counters. 

g's picture

I read that article this morning and was wondering if it was going to be discussed here at ZH. MSM cheerleading in the extreme.

Platinum_Investor's picture

It may be Dow 20,000 in 5 years but it will also be 10% inflation that goes along with it.

Dr. No's picture

Hey, 20,000 is 20,000.  I need to know when so I can get those hats made by the "idigenous people of whereever....."

DaddyO's picture


I'll stick to my tin foil hat...just sayin


augie's picture

I believe you are confusing hats with "the glass dishes with tiny bubbles and imperfections."

palahniuk must not be misqouted.

Dr. No's picture

Glass dishes, DOW 20000 hats, all part of a portfolio for "versatile solutions for modern life". 

Do you know what a duvet is?

augie's picture

Yeah i drink from one every morning. Really helps me wake up in the morning.

the not so mighty maximiza's picture

Big and I am thinking real big.  Larger then previous QE's put together.

HelluvaEngineer's picture

Easy.  Just square the last QE.  Repeat until dollar goes to zero.

Saxxon's picture

I wonder if the Administration will simply give money away a-la George W. Bush.  Write everyone a check.

Silver Dreamer's picture

It's all debt of course, and we'll have far more of it before this party is over.  Why not hand out 10K to everyone with a SSN.

tmosley's picture

Not large enough.  Maybe larger.

Temporalist's picture

What, did you call Paul Krugman this morning for advice on posting about QE3?

tmosley's picture

Exactly.  I loved the odd phrasing, how something can be both larger than not enough, and remain not large enough.

It's the most awesome doublethink of all time.

breezer1's picture

$200 bil per mo deficit + reduced tax revenue . look for major distraction before winter.

mayhem_korner's picture

But they "fell" less than expected...

What's the frontrunning expectations for how much the DJIA will fall this month?  600

Clueless Economist's picture

This is most curious.  My Keynesian solutions should be creating or saving jobs, not losing them.  I believe it is time to double down on shovel-ready job solutions (ie let us spend Trillions more)

the not so mighty maximiza's picture

Triple or quadrouple down I think.  It just hasnt been big enough ,,right?

MachoMan's picture

You joke, but if people are willing to trade us real things for paper, I think we need to exploit it to its fullest extent, at this juncture, for the common good (hint: not to expand the wealth gap).  We're broke either way...  might as well get infrastructure built and in place should we ever decide to take life by the horns and hump it into submission, rather than just waiting around for the check in the mail.

mayhem_korner's picture

Edit: "Keynesian solutions" is a contradiction in terms.


StychoKiller's picture

contradiction in terms = Oxymoron

Dr. No's picture

Do you think there is "slack" in the system and therefore need more time for the stimulus to get "traction"?  I find it hard to believe government directed spending, coupled with price controls on money, would not result in efficient distribution of capital.

g's picture

Hey using spoons instead of shovels should be better for the economy 



Esso's picture

Depression? The CNBSers said things have never been better.

ziggy59's picture

this is one helluva Goldilocks Economic Controlled Demolition is..

hedgeless_horseman's picture
Controlled demolition?  Yes.  Why?  This:
“What people need to hear loud and clear is that we're running out of energy in America.”                                        —George W. Bush, May 2001
hedgeless_horseman's picture
06-02 08:47: Saudi oil minister says Saudi Arabia always ready to meet oil demand
06-02 08:52: Saudi oil minister says Saudi Arabia always ready to crush democracy and basic civil rights
06-02 08:59: Saudi oil minister says Saudi Arabia always ready to exchange its nation's only natural resource to benefit a few royals with US dollars and US military backing

augie's picture

Can someone please tell me (if you've seen this already) if this guy is credible?


I watched this video a few years ago and whenever i refer to him, people always tell me he's inaccurate. I trust the opinion of ZH'ers a considerable amount more than the imbeciles i interact with, so i would appreciate anyone's time in setting me straight here.

JPL's picture

I watched episode 1. It is just mathematics. All true. But think about assumptions. That is the point.

augie's picture

Exactly, thats what i am confused about, are his assumptions about discovery, production, and consumption rates accurate? Pretty terrifying if they are.

FunkyMonkeyBoy's picture

So, er, a sane person would ask:

QE1, QE2, QE Lite, etc didn't create jobs...

... so, QE3 will? QE3 is the solution to creating jobs right? Quantitive easing has proven to create jobs, right?

"Insanity: doing the same thing over and over again and expecting different results"

the not so mighty maximiza's picture

We are not dealing with sane people FunkyMonkeyBoy

FunkyMonkeyBoy's picture

No, but we are in charge of deciding if we allow these genocidal maniacs to make these decisions.

Remind me, why are americans allowed to bare arms again? Self-defense against tyranny/oppression qualify?