More On The Incomplete Picture Presented By Initial Jobless Claims

Tyler Durden's picture

Even with declining initial unemployment claims being trumpeted to great Comcastic fanfare as a sure sign of the end of the Apocalypse, and the Seasonally Adjusted Insured Unemployment number now down to 5.465 million, (dropping from an early August peak of 6.904 million), the one number consistently forgotten is the exhaustion transfer as more and more jobless no longer qualify for traditional 6 month unemployment insurance (being unemployed for more than half a year will do that to you). Nonetheless, combining the two data series presents a much uglier picture: adding the 3.859 on Emergency Unemployment Compensation to those on current benefits yields a total of 9.3 million who are suckling at Uncle Obama's teat! Furthermore, the series has ticked higher recently even as initial claims have continued declining. The combined number is a mere 175k off the all time high in this cumulative data series of 9.5 million recorded in late July. Additionally, at the market bottom in March the combined number was just under 7 million, meaning that as the market has rallied over 60%, the economy has lost 2.5 million workers! And don't forget that over the past 6 months an additional set of workers has rolled off the even extended EUC insurance benefits, which according to some estimates could be higher than 1 million (cumulatively) over the past 6 months. As this data is lost somewhere in the limbo of U-6, we can only extrapolate what the attached chart would look like if it captured not just those who collect the weekly $400 or so from Zimbabwe Ben, but also those who no longer are eligible.

So lest we forget and turn skeptical, jobs are a lagging indicator, and somehow not only are those 2.5 million in incremental losses since March supposed to get jobs full employment as implied by the insane 23x fw P/E, but many more incremental jobs are supposed to appear out of left field. Or so the Chairman of the Federal Reserve, and, of course, the President would have you believe.

Lastly, Mr. Jan Hatzius, whose uncanny "predictive" abilities are the stuff legends and Bloomberg columns are made of, has not changed his NFP estimate for tomorrow: -100,000. A major surprise in either direction will llikely be a market positive event: i.e., economy is improving, so dollar must be beaten with reeds, or economy is collapsing, so Bernanke will buy more MBS, ergo, dollar must once again be beaten with reeds, both leading to aggressive buying of ES on the consolidated tape by 2,600 processing cores.

h/t Mike and CreditTrader

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Howard_Beale's picture

Oh TD, we had a nice 2 close reversal today. Don't spoil the fun until our shorts are murdered.

Burnbright's picture

For some reason this chart reminds me of a river of blood from all the hemorrhaging of jobs going on.

Anonymous's picture

man where does it end. when does reality hit? I almost feel like the powers that be put obama i office to set a black man up to fail. it was a suicide mission.

Don Smith's picture

Bad numbers, to be sure, but isn't the top line number finally flatlined?  Yes, I understand that more people are filing for emergency unemployment (I've retweeted your story to my paltry following), but the total number of jobless is finally holding steady, right?  Obviously, there's no new unemployment gains, and the currently unemployed are having a hell of a time finding new employment, but it seems like businesses have finally cut everyone they can. 

I'm no green-shooter, by any stretch, but there is encouragement in this data, taken as a whole.  If employment is a lagging indicator, and new claims are finally falling, won't all this money sloshing around eventually find its way into the hands of job-forming companies?  Even the billions going to the hemophilic cephalopod executives has to be spent on boats and planes (quick! buy Textron!) or hoarded in stocks and bonds, the effect of which is to capitalize companies. 

Again, I've been waiting for the flock of black swans, and still am, and I also believe it's dishonest for the MSM to shout about the initial claims without covering the big picture, which you do so well.  However, as blindly bullish as CNBC can be, there's an overswung pendulum in this post, too. 

Burnbright's picture

Yes, I understand that more people are filing for emergency unemployment (I've retweeted your story to my paltry following), but the total number of jobless is finally holding steady, right?  Obviously, there's no new unemployment gains


Anonymous's picture

"I also believe it's dishonest for the MSM to shout about the initial claims without covering the big picture"

So does Barry Ritholz.

Anonymous's picture

Just wait until the first quarter of 2010. Retail will get decimated.

Michael's picture


Now I know why some of the the Aussie greedy freaks wanted a carbon tax so bad.

CCS technology is just plain stupid. The biosphere loves CO2.

Global CCS Institute To Launch A$50 Million Funding Round Monday

I’m going to tell Alex Jones about this CCS angle, he’ll ride the topic for all it’s worth.

I remember the movie The Graduate (1967) and the one word piece of investment advice was Plastics. Today the word is CCS.

Michael's picture

Al Gore's money is chump change compared to this.


Michael's picture

"Carbon capture and sequestration is going to be the greatest research, technological and environmental challenge of the 21st century. Whether it's clean coal-to-liquid development or working to upgrade existing coal-fired plants to meet environmental standards, Senator Rockefeller has worked to make sure that the development of a carbon sequestration program must be a top federal priority."

delacroix's picture

clean coal is a myth, like fuel cell cars. how do we sequester asshats like rockefeller.  natural gas will play a much more dominant role in power generation, until nuclear makes a comeback.

trav777's picture

This is just jackassed...nature sequesters carbon...they're called fucking PLANTS.

Stop the urban sprawl you freakin Congressmorons

CTL is a fail, give me PBMR

Pondmaster's picture

CCS a.k.a. CO2 + H20 = H2CO3


Imagine huge concentrations of CO2 in the ground, contaminating the worlds aquafiers ? And weakening the limestone strata  therein ?


The oceans of the world have absorbed almost half of the CO2 emitted by humans from the burning of fossil fuels.[1]  The extra dissolved carbon dioxide has caused the ocean's average surface pH to shift by about 0.1 unit from pre-industrial levels.[2]  This process is known as ocean acidification.  Depending on the rate and magnitude of future emissions, the ocean's pH could drop by as much as 0.35 units by the mid-21st century.

Anonymous's picture

This is a real issue and should be discussed rather than global warming from CO2- patently stupid.

Anonymous's picture

"Imagine huge concentrations of CO2 in the ground, contaminating the worlds aquafiers ? And weakening the limestone strata therein ?"

OMG! The Shear Horror of it all! Quickly, throw ALL EXISTING baking soda into the oceans NOW.

Ya know... this has been happening for 100's of millions of years: it's called KARSTING

The arrogance and ignorance of these global warmist pseudo-scientist idiots (and their followers) is infinite. Ocean acidification is the latest scare tactic. People who think they can reverse or change this globally-buffered system are either stupid beyond description or using scare tactics to get you all to shackle yourselves to their ball'n'chain.

delacroix's picture

xmas, has slowed the job bleeding down. It will resume, although maybe not as bad, after the first of the year. businesses are still fighting to stay alive, and many will go BK next year.  you have to do enough business, to stay in business!

gatopeich's picture

"Mr. Jan Hatzius, whose uncanny "predictive" abilities are the stuff legends and Bloomberg columns are made of"


As in the classic: The Stuff that Dreams are made of. No gold no good!

Anonymous's picture

"clean coal is a myth, like fuel cell cars"

I assume you mean hydrogen fuel cell cars as there are already plenty of pretty nifty electric ones zooming around. I quite fancy a Mini-E myself (though I'd have to go with the noise generator, its freakishly quiet)

trav777's picture

no...a fuel cell is a catalytic reactor that oxidizes inputs and produces a net current.

What we NEED is a gasoline fuel cell, not a hydrogen one.

Alcohol fuel cells and gasoline fuel cells can operate at SIGNIFICANTLY higher efficiencies than ICE engines and are where research efforts and dollars should be directed.  What this means on the road is far less gasoline consumed per road-mile.

Instead we get Hydrogen know how many smart people I've had to talk out of the myth of Hydrogen?

Anonymous's picture

Unfortunately, I have to disagree and agree with you. Hydrogen alone won't do it. You need 3 Hydrogen, and 1 Nitrogen = NH3. The Belgians ran their city buses on NH3 for the duration of WWII, since petrol was so scarce. The USAF did a case study that if they had to fight a war without gasoline, we would use NH3. You can make it electrically from air and water.

Anonymous's picture

State and local governments have just been trimming around the edges with stimulus II money keeping the parking lots full at most government buildings.

That will change so, even if the private sector were to end all job cuts, and they won't, the bottom is about to fall out on the school teacher, the administrator, the diversity consultant and various other supernumeraries on the public payroll.

Anonymous's picture

Just wait until after the holiday retail season is over.

A huge number of retailers are just hanging on until after the holidays... then the axe will drop on tens of thousands of employees.

Miles Kendig's picture

Jobs.  America doesn't need no stinkin' jobs. After all, isn't worldwide GDP predicated upon the OECD exporting jobs? Just as long as Ben will give out free candy to his member institutions and those that are reliant upon them these non existent bubbles will remain intact.  After all, DB said that one of their biggest fears for 2010 is that the easy money policies might get tightened. I suppose we should be looking for the PR campaign that will attempt to redefine full employment as a U6 of -25%.

I suspect that this era will forever redefine the engine of America as being the money center banks and not Main Street.  After all, Bernanke's and both the Bush & Obama administrations efforts have everything to do with sacrificing Main Street for Wall Street.

Sqworl's picture easy it was for Wall Street to seduce a money hungry former Acorn community activist...His first order of business was embracing the best bank robbers of the century to school him on economic policy....

In a more perfect world...everybody refuses to pay taxes...

Anonymous's picture

"In a more perfect world...everybody refuses to pay taxes...
OK, you go first.

deadhead's picture

Nice job on presenting a more accurate picture of the unemployment situation.

I would simply remind all of us about the birth/death model statistical catastrophe.

I would also add this anecdotal story about New York unemployment: for those people who fell off the rolls in the last couple of months (not accounted for naturally), the State Labor Dep't had them continue to file a claim in anticipation of the now passed extension.

Sqworl's picture

I recently attended a dinner party where the average age was 40 to 55.  30% of the guest were unemployed????  It felt more like a wake than a festive occasion.  Those who still had jobs were fearful of being terminated.  A few of them were academics and felt secure.  Live from New York, its Saturday Night....:-(

AN0NYM0US's picture

almost 80,000 jobs added (in Canada) the majority in education???? Employment rate comes down. The demographic (women 25-54 +49,000 and men 55 and older +17,000)


Anonymous's picture

Let's not forget that the top-line number for new unemployment claims is from a week in which government offices were closed for two days over the Thanksgiving holiday. I bet had it been a normal week the number would have been higher.

alexdg's picture

The EURUSD fell from 1.507 to 1.497. The SPX held its place at 1112. Can this be a decoupling or will the SPX fall back to sense?


max2205's picture

"those on current benefits yields a total of 9.3 million who are suckling at Uncle Obama's teat!"

a little harsh i would say.. these people are feeling the pain and should be respected as such

max2205's picture

"those on current benefits yields a total of 9.3 million who are suckling at Uncle Obama's teat!"

a little harsh i would say.. these people are feeling the pain and should be respected as such

topshelfstuff's picture

What is missing from reports on Unemployment is the fact that the work-force is a shrinking pool, in other words; "the glass is less filled". If workers/employment were to continue to be eliminated, mathematically, we could one day get to Zero unemployed, not because the picture improved, but simply because everyone already lost their job, "the glass is empty"

Aside from this failure to recalibrate the work-force, lower the contents of "the glass", after each report, there exists a work-force known as Essential Employees, mainly comprised of those paid via taxpayer funding, Federal or State taxes. It would help to understand the Employment, Unemployment stats if this amount was known, but this is another topic. I just did a quick search to see if I could find any others who bring up this point of view. I did find a few, and mainly from the Comments left. I highlighted the wording in case you would like to just scan.


Over the past few years, we have railed at the prettyfied numbers that come out of BLS regarding NFP job creation and the unemployment rate. From the Birth Death Adjustment to the understated unemployment rate, the official data (and corresponding headlines) painted a very misleading picture of what was going on. No conspiracy, mind you — just a creeping bias that has slowly distorted the data.

Yes, I did find some who bring up this point of view, underlined in pastes below:


Labor Pool:  637,000 left the labor force last month, typically because they could not find work. The shrinking labor pool has made the unemployment rate appear better than it really is.  7.5-8% is a slam dunk next quarter, and if things get even a little worse, we could see even 9.5-10% unemployment rate before the recession ends (Remember, Unemployment is a lagging indicator). The NYT reported:

"""Of course, once unemployment hits 100%, the new claims will fall to zero"""

"""I have a question. Once people finish with their unemployment and still haven’t found a job they are still part of the economy. So when unemployment claims start going down how can one be sure that this is a sign of improvement in the real economy? Couldn’t it be that the pool of people likely to lose their job is shrinking without their being any improvement to the real economy?

Pushing this to its absurd conclusion, there could come a time when no one applies for unemployment because everybody has finished with their claims yet no one is employed. Someone looking at new claims as an indication of green shoots would be jumping up and down saying that the economy is in full bloom. """

"""Maybe if we all start referring to the “Out of Work” Index instead of the “Unemployment” Index we could get the MSM to report U6 instead of U3."""

me: Below shows the difference in the contents of "the glass". The Manfacturing Jug is a fraction from its 2005 contents, so one needs to consider the percentage. There simply are not that many jobs left to lose <<< that's the unmentioned, yet important Stat

Manufacturing payrolls, 83 industries (1)

Over 1-month span:
2005 .............. 36.7 46.4 42.2 46.4 40.4 33.7 41.0 43.4 45.8 47.6 44.6 47.0
2006 .............. 57.8 49.4 53.6 47.0 37.3 50.6 49.4 42.2 40.4 42.8 41.0 44.0
2007 .............. 44.6 41.0 30.7 24.7 38.0 32.5 43.4 30.7 39.2 42.8 60.8 48.2
2008 .............. 30.7 28.9 37.3 32.5 40.4 25.3 25.9 27.7 22.9 18.7 15.1 10.2
2009 .............. 6.0 9.6 10.8 16.3 11.4 12.0 24.1 25.9 p22.9 p18.1
Mark Beck's picture

Good observations. What you have presented is what I have termed Quality of Wages. Perhaps Stiglitz can have one of his grad students dig into this as a thesis. Anyway here it is, definition:

Quality of Wages = the underlying influences on job wage opportunity, base wage and earning potential, caused by a fundamental shift in economic incentives. The real effects of failed fiscal, trade and monetary policies on the nations ability to achieve and sustain growth. Identifying the new "real" economy in terms of employment, unrecognized and ignored for at least a decade by the current and previous administrations. Essentially, trying to quantify employment opportunity with regards to wage growth, and the overall capacity for taxation, savings and capital investment.

Another way to say this, is the fundamental shift in our nations ability to generate growth and pay off debts. You cannot destroy your employment base and then hope to somehow impose new significant taxes to pay off enormous debts.

We have reached a Laffer effect in our tax base. This is why a jobless recovery is such a load of crap. There can be no real recovery without strengthening our wage base, and because of our shift towards a "service" dependent economy, the unemployment effects are even more acute. What this shows is, weather through ignorance or choice, when it comes to economic policies, our Government now longer understands who they represent. Government is so big, that its fundamental inefficiencies and mismanagement, are swamping any hope for real growth.

The leach is now bigger than the fish upon which it feeds.

Mark Beck

Anonymous's picture

Great that the rate of unemployed has slowed, but the unemployed (an additional 11,000) still can't pay mortgages and go shopping. As usual, todays reaction is knee jerk.

Grand Supercycle's picture


Another USD spike ... the dollar rally is getting closer.


Anonymous's picture

I'm feeling blue.
9.3 million on unemployment
43 million on social security
34 million on food stamps

that's what about 100 million entirely dependant on uncle sam

then figure another 20 million in military getting paid or something

and so if 25% of americans work to pay taxes to support the other 75% of americans..

that ain't going to work.



BobPaulson's picture

Unrelated but I am curious as to where the beating with a reed metaphor comes from. The only other place I've seen it is in the passion story. Anybody else ever use that very interesting and obscure figure of speech? Nice touch.

kurt_cagle's picture

I'd be inclined to suspect that the numbers are at least (in the weird calculus of BLS statistics) more or less accurate. The IT sector was moribund over the summer and early fall, but in tracking numbers for the last year or so, new IT postings are finally beginning to come back, albeit slowly. IT's a surprisingly good proxy for predicative economic activity - you ramp up on IT when you're beginning new product initiatives, when you're a startup that's moving beyond the two guys in a garage stage or when you're no longer so scared that the economy is going to tank that you're willing to bring someone new in to get that data center project that's been stalled back up and running.

Downside is that a lot of the work at this stage is still part time contractual - something I see personally. I have four clients at this stage (I'm a consulting information architect) all at about 20% commitment on my time, whereas normally I have 2-3 at 40-50% ... I prefer being slightly overcommitted on a forty hour week (say about 120% or so) as sometimes I can work concurrent tasks and bill accordingly. My suspicion is that a lot of the work in this sector at least will be like that - increasing part time consulting work, 2-3 month gigs that begin to stretch out into 4-6 month, then full time.

That doesn't necessarily do much for Joe Six Pack ... what I do (and IT in general) tends to be fairly specialized work, and a lot of employers know that at this stage they can get PhD level talent for a song, which doesn't bode well if you just have a BA in Liberal Arts. Still, from an absolute standstill this summer, I'd say that worst case scenario we've probably hit bottom jobwise, and the momentum will likely pick up into the spring. I also suspect that a downshift in the markets between now and March (which I think is HIGHLY likely) won't have that much of an impact on the labor markets - the downshift will be due to the CRE collapse as vacant office buildings and retail space are forced to be acknowledged by the banks, but the job cutting from all of these empty office buildings and malls has already happened.

A final note - we're in the new normal; except in the TBTF zombie banks, Schumpeter's creative destruction is very much at work here. A lot of the activity taking place, again in the IT sector, is coming from desperate people starting new businesses in a harsh economic climate. Many, if not most, will fail - but the ones that do survive will emerge with a much healthier fiscal discipline than most of the companies started during frothier times. Now's probably a good time for VCs to play the field with more small investments in promising companies.

Anonymous's picture

Anyone notice that about 10% or 3M of all Americans retired in the last year, per same BLS release? And just under 300,000 in the last 1/12th of a year?

Ask a 35 year old if they are laid off, and they'll say they are consulting. Ask a 60 year old, and what are you going to hear?

And how is it weekly new unemployment claims last 4 months just under 2M? To net -11,000 sounds like nearly instant breakfast style re-employment.


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