Same Unemployment Insurance Misreporting, Different Day: Initial Claims Down 22,000 As EUCs Surge Almost Two Hundred Thousand

Tyler Durden's picture

The fabulous news of the day undoubtedly will be the latest release from the Dept of Labor: Initial Claims for the week ended December 26 came in at 432,000, a 22,000 decline from the prior week, and below consensus. The number was sufficient to prompt Bloomberg's Courtney Schlisserman to come up with the following observation, "Fewer Americans than anticipated
filed claims for unemployment benefits last week, pointing to an
improvement in the labor market that will help sustain economic
growth next year
." Perhaps Courtney and Steve Liesman should sit down in a corner and finally figure out what this whole EUC (Emergency Unemployment Compensation) business is - trust us, it is not that difficult. And for the week ended Dec. 12 it surged by 191,669 to almost 4.5 million, another all time record. Three weeks ago we were shocked when this number hit the all time high of 4.2 million: in a mere 21 days it has added a whopping 7% to the total. Unfortunately, at this point we have gotten a little desensitized to new EUC records. We ask Ms. Schlisserman what happens to the "sustainable economic growth" when there are 0 Initial Claims (hurray!!) and a million EUC claims weekly (d'oh)? Again, a simple question. Luckily for Bloomberg, the DOL and the BLS there is no consensus number for EUC, as the downside surprises there would have been staggering, if anyone actually cared to report those on the front pages of the even impartial mainstream media.

To be honest, Courtney does point out that Conference Board numbers we discussed yesterday, which demonstrated that Americans have now written off any possibilities for a raise until the 30th century.

Americans are concerned about their financial
future. Fewer consumers in December believed their incomes will
increase over the next three to six months, the Conference
Board’s confidence report this week showed.

And with wage deflation still pervasive, John Williams' hyperinflation thesis may just have to be put on the backburner for a few [months/years/decades].

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max2205's picture

Exactly. Well put. Can not agree more.

Anonymous's picture

Saw some reports that x number of unemployed unable to file for unemployment b/c they could not get through either phone or web to file. I think it was Conn. that had a server shut down from the demand.

Warren Buffet is said to have laid off 21,000 from his different companies and no hiring for some time to come, even if the "economy" turns around.

Happy New Year everyone!

Brick's picture

I think all the reporting on this is pretty poor myself.The seasonally adjusted number for initial claims is 432,000 from a non seasonally adjusted figure of 557,000 giving a seasonal adjustment for the period of December 19 - Decemeber 26 of -125,000. Traditionally auto manufacturers and others do lay people off during this period. Looking back at the seasonal adjustment over the last 8 years for this particular week then unusually this is consistent(seems like they corrected the bias for last years figures) as a seasonal adjustment (give or take 20,000 which means the gains are noise). In contrast the seasonal adjustments for unemployment numbers for the week of December 19th are all less than 20,000 up to around 2005 when they started shooting up (They forgot to put this bit right).

Considering auto manufacturers have reduced their work forces the seasonal adjustments here are likely to be wrong.We should also note that California processed more claims in the week than usual and EUC and intial claims are for different weeks. For a rough guide you should be able to take the -254,000 in unemployment add on the 191,000 that fell off the register to work out how many new jobs there were, if they were for the same week of course (which they are not).

What ever way you look at it there were virtually no new jobs and a lot of people lost their benefits which will eventually feed through to the economy.The key for me has always been participation rates which for for all other countries has stabilized while the US particpation rate has tumbled.The US has somewhere near 60 percent of its working age citizens in employment, lower than anywhere else. This is showing up in tax receipts and highlights a fundamental deficit problem at both state and national level which other countries are not seing to the same degree.

Jefferson's picture

Most people don't realize that the bond market collapse that occured in 1931 and is commonly accepted as having kicked off GD1 maxed out with 10 year T rates well under 4 percent. With the current debt overhang, 10 year T rates going over 4.5% would be absolutely catastrophic.

Gotta laugh at guys like Denninger calling for 10 year T rates over 10%.  Like that's ever going to happen. But at least he sees we are headed toward a deflationary collapse.

Jefferson's picture

It will be a wake up call to the financial markets when the US Treasury attempts to pump out an additional $2 Trillion in net new issuance with the world's central banks including the Fed boycotting further sovereign debt purchases. If anybody bothered to look at the Fed's balance sheet they would realize the Fed has less Treasuries now than it did at the beginning of the GFC.

 

All the Fed did was allow the foreign central banks to transfer all of their junk agency backed MBS and debt onto the Fed's balance sheet. The central banking cartel figured out it would be a lot easier to convince the US taxpayer to take the losses coming off the Fed's balance sheet as opposed to the PBoC making a claim.

There's a reason PIMCO has sold off most of its MBS and is now sitting in cash just as the banks completed a major capital raising. 

 

It's game over for anybody who's actually paying attention.

 

Ned Zeppelin's picture

Twas stealth QE, if you consider the agencies to be part of the US government by all criteria but in name.  The game was for foreign CBs to swap their non-guaranteed debt for full faith and credit obligations, although the wink and the nod as of Christmas Eve is "don't worry, it's all full faith and credit debt, including those GSEs."  The Fed will not boycott Treasury sales in 2010.  They will be the only significant buyer, either overtly, through QE 2, or covertly (as was done through the "household sector" purchases in 2009) or most likely, a combination of both. I would have thought the 2010 Agency debt will go unsold if it is not purchased by the Fed, but the Xmas Eve announcement may be enough of a signal to get some foreign support for that debt. 

PIMCO sale: did someone decide to pull their chips and exit the casino, or did someone have a sudden need for cash as their own "extend and pretend" situation reached the expiration date?

Jefferson's picture

There will be no QE 2.

Just look at what is happening with the burgeoning market in unregulated sovereign debt CDS. What government in its right mind, after seeing what just happened with CDS and Lehman, would even allow this market to exist? 

CDS are going to be used to bludgeon European countries then the US into debt default spirals. At which point, developed nations will be forced to get bailouts from the IMF in exchange for accepting austerity measures including limits on carbon emissions and agreements to pay back bailout funds in SDRs.

Earlier this year Obama et. al. got Congress to pass legislation which he signed authorizing the IMF to issue a couple hundred billion dollars worth of SDRs some of which are now sitting on the Fed's balance sheet.  Now Soros is talking about using SDRs to fund climate change measures. Restricting carbon emissions isn't really conducive to efforts at reflation and economic growth.

Only by hard sovereign debt defaults can the IMF force developed nations to start using SDRs.

A little hiccup in Dubai and suddenly the credit agencies are whipping out downgrades left and right on Euroland.

Why do governments even allow credit rating agencies to downgrade sovereign debt obligations denominated in local currencies?

Anonymous's picture

got to laugh at asswipes like you who can't
remember back to the 1970s/80s...

of course on the other hand, we didn't have
qe and irs to control rates....but eventually the
fed will lose control and if it doesn't lose
control over interest rates it will lose control
over the frn...

trav777's picture

Rates above 10% would render nearly every activity uneconomical.

Nobody would borrow ANY money into existence if they had to grow their venture by 10% in order to pay the credit back, assuming zero profit.  It's just not happening.

Deflationary collapse?  Already underway.  Last time, the response was brute-force devaluation.  Some may see it coming, but don't expect it to be announced on CNBC ahead of time.

The window in which to convert the so-called "priceless dollars" (the main meme of Douchinger and the TF crowd) into hard assets will be too small to capitalize on.  The in-crowd, like in Argentina, will have been silently migrating assets ahead of time.  This is like a nightclub fire...you're either already near the exit or you start moving there far in advance to collection Point of Recognition or else you're trapped.  Nobody sane waits around to try to time such an exit to the last second.

My advice is don't wait around for the last possible bit of "value" from your pricefull dollars.  The time to be getting out of them is not during a liquidation phase.  At some point, as we have already seen, strategic default happens.  IOW, people will NOT liquidate assets in order to repay claims.  They will say eff you and jinglemail.

Those expecting to find copious amounts of physical gold available during a deflationary liquidation phase will be disappointed.  NOBODY who is insolvent is going to relinquish such an asset.  If I knew, for example, the date of the priceless dollar, I would begin running up every credit and cash vehicle I had to buy bullion.  Because on that day, you just walk away from the obligations.

Jefferson's picture

I think this will be a drawn out process.

Euroland and Japan will fall apart long before the US creating a rush to safe haven in US Treasuries.

There will be plenty of opportunities to buy gold and PMs at lower prices going forward.

trav777's picture

No, there won't.  Last time during the deflation, gold was unobtanium.  The Mints stopped selling, the dealers ran out, there was very little to buy.

The US is not a safe haven...have you looked at our balance sheet?  How in the hell do you call a nation with $1.5T deficits a safe haven?

David449420's picture

"I think this will be a drawn out process."

You HOPE this will be a drawn out process. 

Fact is, NOBODY knows how this is going to play out. 

What is happening and is going to happen has no historical parallels.

I HOPE it is not as calamitous as it appears to be.

 

 

 

 

SteveNYC's picture

Bloomberg, since about 18mths ago, has become a complete joke. I don't even visit the site anymore, as its content is complete dross/propaganda. I am actually quite certain that people like Ms. Schlisserman would be joining the unemployed ranks in the case they decided to actually report the truth, instead of the crap that their boss has been instructed to report by the United States Propaganda Machine.

Trading your soul and the truth for a paycheck = apalling.

Long live Zerohedge.

Bam_Man's picture

Please do not glorify these people by likening them to whores.

Whores provide a valuable (if illegal or sometimes immoral) service to their clients and are not generally engaged in the business of theft by deception.

geopol's picture

The definition I employed was:

a venal or unscrupulous person

 

Bam_Man

No carnal knowledge here

Zina's picture

So I guess this means that companies that didn't go bankrupt have already fired almost everyone they could fire, and there is no more room for layoffs. But these companies will never hire people again, so the wretches who were fired can expect they will never achieve a new job, and will receive unemployment benefits for the next 20 years.

WaterWings's picture

Exato. Continua, continua, pra sempre, ne?

ptoemmes's picture

Well, there is the 41,000 or so buyout offers from Ford and the so far rumored HP culling of the herd to come in January.

Buyouts are not technically layoffs so those 41,000 or so will never show up in a U3 stat - U6 maybe in due time.

Unemployed is unemployed just like dead is dead no matter how you get there - IMO.

 

Pete

sethstorm's picture

That and you're going to have to make it nigh-impossible to discriminate against long-term unemployed should things turn around.  Offshoring has been useful in this regard for the last 2 major recessions, but now it's hit everyone at about every social class.

There will be a bottom and a recovery, but I expect plenty of folks to be "priced out" of it.  The only way they'll know is by a strange, yet consistent pattern of rejection notices.

Honesty these days means you're leaving money on the table, you forgot to price something out, and/or you've forgotten about certain parts of the law.  I hope that changes in the medium-long term, since it's not going to happen right here/now.

Anonymous's picture

I did some # crunching.

The high on continuing claims came on 6/26 they were 6.904
on that day EUC #'s were 2.596 for a total of 9.500.

lets look at were we are today...

Continuing claims were 4.981. EUC #'s were 4.448 for a total of 9.429. I did not enclude any of the "exented benefit" #'s.

so as you can see people arent finding jobs they are just playing with the #'s

Anonymous's picture

Every morning, CNBC's writers practice reverse conclusion engineering. They have the rosy conclusion ready and find a way to make the incoming data support the foregone conclusion.

johngaltfla's picture

We had 557,155 NSA on what is essentially a 3 day work week last week. As pointed out the EUC's are still climbing higher and higher.

This week, we'll see numbers probably in the 500-530K range NSA on again a shortened week to file.

Recovery my ass. The government will juice the numbers with the hiring of Census workers in January and February but the reality is that the bond vigilantes overseas are going to end this bullcrap in January of unlimited financing of our bloated debtload.

Ben's dilemma is about to hit full force and if he does get re-appointed then he had best turn on the QE spigots or all hell breaks loose domestically as the banks fail in huge numbers.

TJW's picture

Not to worry. Once everyone is unemployed, initial claims will be zero and we'll have full employment!

TJW's picture

"...in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie..."

-- Adolf Hitler, Mein Kampf

digalert's picture

Silly Tyler, the UE #'s are "less worser" (technical CNBS phrase) in pep rally land.

Anonymous's picture

What happens when the claims are 0 and the EUC starts decreasing? Me thinks not too pretty a scenario either!

Anonymous's picture

At a future point, when everyone is out of work, there will be NO new jobless claims.

Anonymous's picture

I just went on EUC this week -- 11 months after being laid off. I suspect the increase in EUC numbers is going to surge over the next month or two.

This past year of job searching has been the worst experience of my life -- I've always been a top performer in school (top 5 MBA program, etc) and at work; now, it's as if I've got a contagious disease as the response rate to my applications/ calls is unbelievably dismal. I know people in manager positions who I wouldn't hire if they offered to work for free and yet they are working and I'm unemployed. I now understand what being "discouraged" really means and why so many people just drop out. What a strange country we live in now.

Anonymous's picture

Best wishes for better results in the new year!

Anonymous's picture

I think people are making the wrong comparison. I don't know why because the difference is pretty basic:

- Initial claims are incremental persons to the unemployment ranks (i.e. newly unemployed)

- EUC is not incremental to the unemployment ranks (i.e. they were already unemployed...they simply changed status)

People point to EUC as if those numbers offset the initial claims figures. But they don't.

Mark Beck's picture

We all must decide for ourselves what is the truth, and do we speak it. Truth is not a game for those who are honest. The media does the people a disservice my misrepresenting the truth.

Our choices should be based on the best available facts. 

Mark Beck

max2205's picture

By Christopher S. Rugaber, AP Economics Writer , On Thursday December 31, 2009, 3:21 pm EST

WASHINGTON (AP) -- A record 20 million-plus Americans collected unemployment benefits at some point in 2009, a year that ended with the jobless rate at 10 percent.

As the pace of layoffs slows, the number of new applicants visiting unemployment offices has been on the decline in recent months. But limited hiring means the ranks of the long-term unemployed continues to grow, with more than 5.8 million people out of work for more than six months.

The number of new claims for jobless benefits dropped last week to 432,000, the Labor Department said Thursday, down sharply from its late March peak of 674,000. The decline signals that the economy could begin adding a small number of jobs in January, several economists said.

Still, hiring is unlikely to be strong enough to quickly bring down the unemployment rate, which fell from 10.2 percent in October to 10 percent in November. December's rate will be announced Jan. 8.

Companies will remain cautious about adding staff until they are confident the economic recovery is sustainable -- something they remain unsure about as consumers and businesses keep a lid on spending, and as the government begins to wind down various stimulus programs.

The Federal Reserve and private economists expect joblessness to stay above 9 percent through the end of 2010.

The slow pace of hiring will force Congress and the Obama administration in 2010 to spend as much as $70 billion to extend jobless aid for the long-term unemployed, or else let benefits -- which were extended several times in 2009 -- expire for millions of people.

"Fewer people are getting fired, but nobody is finding a job," said Dan Greenhaus, chief economic strategist at Miller Tabak.

Thursday's report illustrates the two different trends: first-time jobless claims are falling as layoffs ease, but the total number of people collecting unemployment checks is still rising.

More than 10.1 million people collected jobless benefits in the week of Dec. 12, the latest data available. That's up by about 200,000 compared with the previous week.

That figure includes 5.3 million people receiving the 26 weeks of aid customarily provided by the states, and 4.8 million people that have shifted to the extended benefit programs enacted by Congress over the past two years and paid for by the federal government. Unemployment insurance averages about $300 per week.

But the extensions are set to expire in February. That could mean as many as 1 million people would run out of unemployment aid in March, according to the National Employment Law Project, a nonprofit group.

The total number of people who at one point collected benefits in 2009 -- roughly 20.7 million -- is also a record. A larger proportion of the unemployed received jobless benefits in the last steep recession in 1981-82, but the work force has grown by about one-third since then.

Fifteen million Americans are out of work, an increase of 3.8 million since the start of 2009. There are six unemployed people, on average, for each available job. And the so-called underemployment rate, counting part-time workers who want full-time jobs and laid-off workers who have given up their job hunt, stands at 17.2 percent.

Budget-strapped state governments will struggle with higher spending on unemployment insurance in 2010. States are required to set aside money in a trust fund to pay jobless benefits, but 25 have already run through their funds and have borrowed $26 billion from the federal government.

The Labor Department has projected that 40 states may need to borrow as much as $90 billion by 2012.

Thirty-five states have already increased the unemployment insurance taxes they levy on employers for 2010, according to the National Association of State Workforce Agencies. Some are also cutting benefits as they try to reduce the size of budget shortfalls that are expected to reach $180 billion in the coming fiscal year.

The drain on federal and state finances could force Congress to consider raising the federal unemployment insurance tax, which is currently 0.8 percent on the first $7,000 of wages, or making other changes.

max2205's picture

http://www.calculatedriskblog.com/2009/12/weekly-initial-unemployment-cl...

 

but this chart looks soooo goooood...TD, we have to hold off going long :(

 

when the charts are poisioned, we all go broke

Anonymous's picture

"It's not a lie....if you believe it's the truth.", George Costanza.

Cognitive Dissonance's picture

Truth and lies are usually determined by the majority, not by fact or reason. We simply like to believe our truths have a basis in fact so that we can sleep better at night. The capacity of the human mind for self deception is staggering.

Anonymous's picture

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Anonymous's picture

And, sadly too, is the suffering caused by not being able to sleep.

To rear the young, to deal with work or the lack of it, to survive the heavy hand of the 'state', to face the rot of aging, most of us willingly put blinders on and keep pace with the herd. Whether we march together to greener pastures or into the slaughter house does not seem to make much difference.

Anonymous's picture

Hi, great post there! I like it very much,especially the table.

Thanks for posting it!

Cheers!
Effie