Double Dip Picking Up: Jobless Claims Spike To 472,000, On Expectations Of 455,000

Tyler Durden's picture

Jobless claims were a disaster, coming in at 472k, on expectations of 455k. Prior was revised, surprise, surprise, higher to 459k from 457k. What is scariest is that between extended benefits and EUC, now that Congress has turned off the perpetual insurance spigot for the unemployed, dropped by -158,155 and -217,513. This is almost half a million people who just lost their weekly governmental stipend to buy Apple's latest app, iTimberrr. Full report here. RIP Recovery: the economy has now entered the "total freefall" area. And in the meantime, the 2.90% on the 10 year is now implying the FV of the S&P just dropped by another 8 points to about 740. And as a reminder, Goldman's NFP expectation for tomorrow is -100,000.

Here is Goldman's Sven Jari Stehn explaining why tomorrow's NFP number will be a catastrophe:

The key to the June employment report is the “Census displacement” effect—the extent to which the increase in Census workers in May reduced private sector payrolls and the reduction of Census workers in June will add to private sector payrolls.  A simple model shows that this effect has been sizable in the past, implying that private hiring may be boosted by around 100,000 in June. Taking into account the unusually high unemployment rate, however, suggests that the effect will be more muted at 50,000. Given the limited number of Census hiring periods, however, these estimates are surrounded by considerable uncertainty.
Although the ADP employment report came in below consensus expectations, our forecast remains that private payrolls grew 150,000 in June.  Our forecast for the overall change in nonfarm payrolls is -100,000, with Census payrolls falling 230,000 and other government payrolls down 20,000
Following May’s disappointing private-sector payroll reading and recent signs of weakness in other parts of the economy, this Friday’s employment report will provide an important gauge on the robustness of the recovery underway.
A key question surrounding Friday’s release is whether there has been a “Census displacement” effect. Citing the disappointing private payroll figure in the peak month of Census hiring in May, a number of analysts have suggested that Census hiring might have displaced private hiring. Given that Census payrolls probably dropped by around 230,000, this effect would suggest a considerable snapback in private hiring in June.
We take the following approach to test the “displacement” hypothesis. We explain changes in private sector payrolls with lagged private sector payroll changes, initial unemployment claims, the change in continuing claims, and Census payroll changes.  Our model covers four decennial Censuses—1980, 1990, 2000 and 2010. As data on Census hiring is only available from 1990, we proxy for Census hiring in 1980 using the change in federal government payrolls excluding the postal service. To account for a growing labor force, we scale these variables by the size of the labor force.
Our findings can be summarized as follows:

  • Census hiring has indeed displaced private hiring…We find that private sector hiring was reduced by 5,000 for every 10,000 of Census hiring in the past. At face value, this would suggest that private sector hiring in May was held down by around 200,000 and that private hiring in June should be boosted by around 100,000.
  •  …but the extent depends on the unemployment rate. A key problem with this analysis is that unemployment is much higher today than it was during the last three Census hiring periods. Thus, it is somewhat less likely that Census labor demand has constrained the availability of labor for private-sector employers. To adjust for this, we add the interaction of Census hiring and the “unemployment gap”—the difference between the unemployment rate and the estimated sustainable rate—as an additional explanatory variable to the model. As expected, this interaction term has a significantly positive effect, suggesting that the displacement effect diminishes as unemployment rises. At the current unemployment gap of 4.7% the model suggests that 10,000 of Census hiring would reduce private hiring by only about half the “normal” effect. This model therefore suggests that Census hiring in May subtracted around 100,000 from private hiring and that we could expect the reduction of Census workers in June to add 50,000 workers to private payrolls.

Although the data flow since publication of our preliminary estimate has been on the weaker side, we have not changed our payrolls forecast.  The ADP report on private-sector payrolls rose by just 13k in June, coming in below the 60k consensus expectation. However, while the ADP report provided an accurate early indication of the weak private payroll release in May, it has generally tended to underestimate private hiring—especially in March and April of this year. Furthermore, the ADP report combines payroll data from ADP with other data—such as initial claims and lagged payrolls—to forecast the change in private-sector payrolls. As a result, a significant part of the low ADP reading is likely to be due to weak private payrolls in May and stubbornly high claims, rather than independent information suggesting weakness of private hiring in June. We therefore continue to project that total nonfarm payrolls fell 100,000 in June, with a 150,000 gain in the private sector, a 230,000 drop in Census payrolls, and a 20,000 drop in other government payrolls.
Sven Jari Stehn

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homersimpson's picture

My job at the nuclear factory is safe for now but please teach me to hit the "any" key..!

Hungry For Knowledge's picture

Goldman's 150,000 positive number is really only the bogus "birth/death" model increase, which assumes that "magically" 150,000 jobs "born" in June.  Know anyone who is building a business?  Me either. 

traderjoe's picture

The Birth/Death model is a complete absurdity. Not only are those businesses not being born (that's part two of the model), but if they call a business and there's no response, they still count the jobs as of the last survey. So, even if the business closes, the jobs are still counted. And while you can snicker at the B/D adds from the birth part on the BLS website (they only present non-season numbers, so you can't add them to the seasonal headline), there's no way to tell what the deaths assumed away are. Even after the massive benchmark revisions, they actually amped up the B/D for 2010 v. 2009. 

MilleniumJane's picture the town I live in, small businesses are dropping like flies.  I know of one that has been changed to an eaterie and the rest are sitting vacant.  Some of the landlords are even offering free rent for 3 months just to get someone in.  These are desperate times.

cainhoy's picture

this will be juicy! is the balloon finally going up on this disgusting cesspool of a society? I hesitate to use the word "civilization".

LoneStarHog's picture

The sign of a civilized society is its LACK of laws, as a CIVILIZED people require very few laws because they are INHERENTLY civilized.

overmedicatedundersexed's picture

The legal mafia, Judges and Lawyers and ahh hemmm the congress..strongly disagree..more laws = more criminals = more trials = more jails and police.. we are in the grips of a legalized police state (no pun intended)

Ripped Chunk's picture

Wait until they completely privative "corrections".

"Well Shmocko, you are eligible for parole but quite frankley we need the revenue next year. Since they legalized drugs, we really need the headcount."

Paladin en passant's picture

A slight correction, the sign of a civilized Government is a lack of laws because they respect the rights of their employer-citizens.

We have a federal government that regulates everything down to the size of your toothbrush and the types of trees that are permitted to be planted on the sides of the roads.

LoneStarHog's picture

A civilized society requires NO/LITTLE government, as it regulates itself.  A civilized society is an intelligent and educated people. Such people will not have nor tolerate an oppressive government.  If America was truly such a society WaShitOn would have 200,000,000+ at its doorstep to take it down.

Just try having an intelligent/educated discussion with an American about contemporary America. The normal response is either anger or a blank stare.

Paladin en passant's picture

Wait till November.  We're a civilized people taken advantage of by our government. We don't riot against the government generally, but we do throw the bums out. We've already forced the resignations (i.e. not running again) of many long-term congressmen.  We may be slow to anger, but when we're aroused, we clean house.

LoneStarHog's picture

I am watching for A FALSE FLAG EVENT sometime prior to the November elections.

We shall see...

Ripped Chunk's picture

Agreed, just a matter of time.

By November "coalition" forces will occupy Iran as well.

RockyRacoon's picture

That is a common meme as we near every election cycle.  It means that the prognosticator is suffering from a lack of knowledge about the current events cycles.  Nature abhors a vacuum, as does the human mind.  When we don't know, we make up stuff or fabricate possibilities based upon factors over which we have no control.  That lays the blame at the feet of others.  The more unstable, unpredictable, and unsavory events appear, the more outlandish the predictions become -- and the more mysterious the perpetrators.

But, you could also be right.

Gully Foyle's picture

Paladin en passant

"We don't riot against the government generally, but we do throw the bums out. We've already forced the resignations (i.e. not running again) of many long-term congressmen. We may be slow to anger, but when we're aroused, we clean house."

Except for a truly clean home you don't use the septic tank water of which all politicians reside.
Riddle me this, when do you intend to remove the money and connections that are the root of the corruption? Is it after you shuffle new corrupt faces?

Paladin en passant's picture

Only the naive believe we could ever construct an incorruptible system.  We'll vacillate within a relatively narrow range of corruption for eternity. 

That's the nature of man. Ninety percent of people choosing to enter politics do so for two reasons: money and the power to get more money.  That'll NEVER change.  We just need to flush out the septic tank this fall and in 2012 so it'll quit backing up into our homes.  We don't need a perfect system.  Trying to create a perfect system leads to fascism and tyranny.

Rioting against the government is a ROW phenomenon.  Americans have lives to live. That's why we hire politicians to take care of that crap. When we tire of them, we vote for Change.  When that turns out to be just another Chicago scam, we decide to get serious and vote the bastards out.  At least the new crop of bastards has a bit of fear for a bit of time.

RockyRacoon's picture

...but we do throw the bums out.

Well, yeah, all of them except our bum.  He's ok.

Incumbents rule, historically that has not changed -- so nothing changes.

Walt Whitman's picture

However, when the "legalized police state" has changed the paper ballot system to an easily hacked and "revised" electronic ballot system, your chance of "throwing the bums out" is severely and irrevokably curtailed.

Ripped Chunk's picture

Yes, this is clearly the strategy for the future.

I only do the "drop off" paper ballots now but really, how do I know it is even counted???

Cursive's picture


The sign of a civilized society is its LACK of laws, as a CIVILIZED people require very few laws because they are INHERENTLY civilized.

Thank you.  Couldn't have said it better or more succinctly myself.

Pladizow's picture

The more corrupt the state, the more numerous the laws. - Tacitus, Roman Senator - ???BC

LoneStarHog's picture

150,000 gain in the private sector? --- Sure, Birth/Death Model phanton jobs...There is only one comic book Phantom job required and it is already filled

Cursive's picture


It is laughable, isn't it?  I think there is all of this focus on private payrolls because they want to diminish the coming tsunami of public sector layoffs.

Boilermaker's picture

Well, that's the fun part about exposing the results (of anything, really) without making the data and methodology available...ain't it?  You can only speculate that it's bogus.  They'll never let you prove it.

Rogerwilco's picture

"they want to diminish the coming tsunami of public sector layoffs."

Those layoffs will never happen. We will have QE2 to bail out all of the states and CRE fat cats. Of course they will wait until after the elections (lame duck Congress) to make their move. The money will have strings attached and will pretty much seal the deal as the Feds assume full control down to the local level.

oklaboy's picture

look out belooowwwwwwww....

Boilermaker's picture

Futures rise on the news, naturally.  Albeit they are still in the red.

Run for the bomb shelter negative data...down 30.  Yea, right.

fuu's picture

I noticed that as well. 

firstdivision's picture

Going green now, so now the short squeeze begins.

Boilermaker's picture


This shit never ends.  Never.

RockyRacoon's picture

Patience, my good man.  When it ends we will all be looking in the rear view mirror saying, "What the hell was that!?"  It'll flash by so fast, so many traders will be caught with their shorts down, so many politicians will be bumped off the stump by the earthquake that there will be no time to prepare.

Except for those of us who already have, of course.

What part of "Get Out Of This Market!" is so hard to understand?  Picking up pennies in front of an oncoming steam roller is bad for the health and the wallet.

Cursive's picture

RIP Recovery: the economy has now entered the "total freefall" area.

Honestly, this report gives me feelings of rage.  Rage because we knew the Keynesian clowns were wasting time and money to keep their Potemkin Wall Street village afloat.  No punishment is too harsh for Benron et al and no derision is too light for the enablers and dupes like Leo Kolivakis.

Cognitive Dissonance's picture

Thanks for the link. This paragraph pretty much says it all.

"By using its balance sheet to protect an investment bank against failure, the Fed took on the most credit risk in its 96- year history and increased the chance that Americans would be on the hook for billions of dollars as the central bank began insuring Wall Street firms against collapse. The Fed’s secrecy spurred legislation that will require government audits of the Fed bailouts and force the central bank to reveal recipients of emergency credit."

EscapeKey's picture

The truely shocking bit is that Bernanke lied about it. If I were to do the same, I would be in jail for 30 years. But this is clearly a case of an individual thinking he is above the law.


Cathartes Aura's picture

if he's still free, then he is. . . above the law.

Ripped Chunk's picture

What !!???  Ben lied !!?????

I am shocked !

RockyRacoon's picture

And this did not come from some tin-foil hat wearing blogger site.

How did this article sneak by into the MSM?  Somebody's ass is on the street.

Ripped Chunk's picture

No shit!  Don't upset the Sheeple right before a big holiday weekend!

Paper CRUSHer's picture

I sympathize and I would like to add that "PRIVATE" Benjamin Bernanke will choose "inflate and die" as he is well known for his MONEY EXPANDING ACTIVITIES, so going along those lines a deserved punishment in the form of  slipping one of these CAPSULES into his mouth will do the trick......DR KANANGA V 007:

HA-HA love the line........"He always had a INFLATED opinion of himself"

jdrose1985's picture

Money expanding capabilities my ass.

Good luck finding anyone other than at the table borrowing money into existence, the end is nigh as voters throw the bastards out.

into the deflationary hell hole we march, its game and gig over, the inflationary helicopter rescue was a LIE.

jtmo3's picture

150k my ass. Do they expect someone to believe that tripe?

Cursive's picture

It probably helps whatever predatory prop desk short squeeze they will attempt today or tomorrow.  Trading is war.

Boilermaker's picture

Exactly, it isn't real but it's justification and a plausible reason to jam the shorts.

I need more asshats's picture

We have to remember that there are a lot of companies in the private sector that are just quasi-government entities.

Funnel some recovery money to these entities and let them hire some 'employees'.

sumo's picture

Naturally, Reuters, Bloomberg, and Bubblevision will describe these numbers as "unexpected".

Yeah, who would have guessed?


MilleniumJane's picture

No these people live under a rock?  I shouldn't be, but I am in constant amazement at the obtuseness of mainstream media.

Cathartes Aura's picture

employed actors.  do they talk to the cameras?  are shows "produced"?  do they have paid sponsors / advertisers?

then they're actors.

papaswamp's picture

First the 'census displacement'? Who the fuck would pass up a long term private job for a temp census job? Perhaps I'm being too simplistic.....