Just How Bad Is This Week's Unemployment Claims Data? Not Bad At All

ilene's picture

Just How Bad Is This Week's Unemployment Claims Data? Not Bad At All

Courtesy of Lee Adler of the Wall Street Examiner

The mainstream media today reported an increase in initial jobless claims this week to 380,000, an increase of 13,000. This was another huge miss for the consensus of conomists, where the central tendency of expectations was for 359,000 initial claims. The conomic establishment continues to prove its worth week in and week out. The question is whether these people are just clueless or willing instruments of the Wall Street distribution machine. I'll leave that for you to decide. The issue today is whether the number of claims is anything unusual. Does it represent a sign that the economy is weakening?

The media and conomic pundits report claims on a seasonally adjusted basis. That is a fictional number designed to eliminate normal seasonal patterns in the data in order to represent an abstract impressionistic version of a smooth curve for consumption by the masses, which the conomic establishment assumes is too stupid to understand real data. It's a very strange device because it is a simple matter to compare the current performance of the actual number, in other words "reality" with the reality of the same week in past years.

The Labor Department (DOL) does publish the actual number. This is not a survey sample, but an actual compilation of the actual weekly claims, which each of the 50 states submits to the DOL. The DOL warns in the weekly release that the current number is an advance number. The fact that the number is revised up every week is simply a matter of the fact that the initial count is not complete. This is not a survey, and not a sample. It is the actual number reported by the 50 states. The number reported next week will be the final number for this week. The DOL is very clear about this. It reports in today's press release that, "The advance number of actual initial claims under state programs, unadjusted, totaled 381,875 in the week ending April 7, an increase of 62,530 from the previous week. There were 448,029 initial claims in the comparable week in 2011." Highlighting is mine.

Can it be any clearer? The DOL spoon feeds this data to the media and the conomic establishment, and they completely ignore the facts. Rupert the Hacker's Wall Street Urinal posts an article claiming to be mystified by the weekly upward revision, when this is a normal part of the process. The number is revised up by 3-4,000 every week. Downward revisions are extremely rare, in fact, they almost never occur. The circumstances would have to involve a larger error in a large state submission. It just doesn't happen under normal circumstances.

The advance number for actual claims is down by 66,154 or 14.7% since last year. The total number of claims will be revised up next week, so that in the end the difference will be closer to 60,000 or something on the order of 14%. There are many reasons for the drop and you can find negative arguments, such as that fewer workers are eligible to file claims (not true), but the fact is that far fewer people are losing jobs this year. New claims this week as were 0.29% (29 hundredths of a percent) of current total nonfarm payrolls. In the same week last year they were 0.34% (34 hundredths of a percent). So the decline in claims is not a matter of fewer people being eligible. A smaller percentage of the eligible are filing claims. Fewer people are losing jobs.

The weekly jump of 62,530 was a big number, but this is part of a normal seasonal pattern. Last year in the same week the increase was 94,212. In 2010 it was 93,631. By the standard of the last 2 years, when the economy was in its initial rebound off the depression low, this year's number is an improvement. It is not as good as during the bubble years from 2003 to 2007 when the gain during this week ranged from 40,000 to 60,000, but it's not a bad number by recent standards.

Wall Street would love to see an excuse for the Fed to do more printing and market propping, so its conomic mouthpieces have ginned up a phony consensus estimate of a phony construct, the seasonally adjusted number, to give the market an excuse to sell off. The players strapped on the dynamite vests and walked into the Eccles Building with their thumbs on the dead man switch, all based on the lie that this week's number was a bad sign.

Here is a chart of the actual data.

Initial Unemployment Claims Chart - Click to enlarge

Initial Unemployment Claims Chart - Click to enlarge

That is a picture of the facts, and the fact is that the current level of claims is right on trend with the trend of the past 2 years. There's plenty of variance week to week, but the trend has been stable, with weekly year to year change ranging from 5% to 20% since mid 2010. This week's number is completely consistent with the trend. People can argue with that all they want, but they'd be arguing with the facts. Many people will start with the argument that the DOL is lying every week. That's a personal choice that everyone is free to make. In my study of a variety of data, I look for logical inconsistencies, and I'm satisfied that the DOL data is reasonably accurate.

The greater problem as I see it, is that people reading the mainstream media and listening to the conomic establishment, are unknowingly being engaged in fiction, and that makes it completely impossible to get at the facts. When you look at what's real, instead of the seasonally adjusted nonsense and the conomists ridiculous interpretations of it, it's absolutely clear that there's no sign, no hint, not a scintilla of evidence, in this data, that the economy is weakening.

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YHC-FTSE's picture

I'm going to give you a +1, not because I agree with your conclusions, which I must say is shallow and bordering on impetuous, but because I don't want to deter other contributors and contrarian debate. Even if we disagree passionately, we're all very grateful here for the efforts of contributors like you. 

AlexWest has already echoed my sentiments, but I'll leave you with these thoughts: If you are going to use the DOL's unemployment data to compile a pretty chart of (diminishing) figures to assert that the economy is just trending lovely, consider the cumulative effects of this data in the real world: In most states, the unemployed can only collect for 26 weeks, after which they are removed from the census whether they have found employment or not. You may wish to look up such basic terms such as, Demand Deficient Unemployment, before concluding that the economy cannot get any worse. It can, and it most probably will, because the truth is, the unemployment rate is way above the natural rate (Structural and friction) of unemployment for a developed country, which by any other language means that the country is in recession. Yes, the Keynsians will continue to try to print and spend their way out - government, investment and consumption spending - as well as engage in spastic trade wars to increase net exports (Of weapons, ipods, and dodgy financial instrunments probably), which will likely push the market indexes ever higher. Imo, I'm looking at the data for Zimbabwe, not a coherent, workable strategy to save a corrupt system from inevitable implosion.

Lednbrass's picture

Agreed, this place benefits from different views.  What I get from this writer and his comments is that on one level he agrees its all a manipulated farce and his effort is toward helping people play that farce for maximum benefit. Are his March comparisons accurate, and could it help some people in making short term investment choices? Possibly so. Do I think it means much in the overall context of where we are heading and will it substantially slow down what is likely to be a major blowup in this society in years to come? Hell no.

Echo chambers are pointless, exchange of views and opinions can have real benefit.  I do give him credit for coming here with the equivalent of a "Kick me" sign taped to his back and sticking around.  Few involved in things financial would have the stones for it and while I may or may not not agree with what they say it is a good thing to have different perspectives here. How many critics would be willing to don a wetsuit of compressed pink slime and jump in a pirhana tank?

If we are all coasting along in a bus with a dead engine, someone observing that there has been a small speed increase because we just coasted down a hill is not the same as claiming that the engine has miraculously fixed. Im not seeing him say that all is well and the sun will shine across the land until the end of our days, merely that in this particular small time frame he thinks that there has been a minor pick up in speed.

Part of the problem here I think is that his definiton of what constitutes the economy and that of many ZH readers is not the same thing.

bkrolik's picture

Lee,

A good supplement for your note on this subject would be today's Mish blog. He also looks at total workforce dynamic... the resulting picture is not so bright....

Regarding the identifying the trend - very good point indeed! But if we all know this specific data set does not help us to identify the trend, as it depends on completely different catalysts (Fed?, deficit?), why to bother analyzing it?

Pool Shark's picture

 

 

To paraphrase Tip O'neill on the Reagan Recovery:

"Let me write $1 billion a day in hot checks and I can show you a good time too."

 Tip was just off by a factor of 10...

AurorusBorealus's picture

I tend to agree with your column, and I agree that there is nothing in the jobs data to indicate that the economy is weakening.  However, $4 per gallon gasoline is weakening the economy, and $5 gasoline will weaken it further, and on and on.  The trend = weakening economy.  The runup in gas prices will break the "narrative" of recovery - deficit spending or no.  This weakness will begin to appear in the job numbers soon.

LowProfile's picture

How else are we supposed to know what the bulls are thinkin?

GovtMediaLiars's picture

Well, the payroll data did just fine by me. I love me some event driven speculation.
I'm going to have to disagree with the author here though. Not on his macro analytics necessarily, but rather on his concluding sentiment that the economy is all peaches and cream.

My analysis - quite extensive analysis - has led me to a sharply different conclusion. I've been wrong before though and I'll probably even be wrong again someday so who knows.

Anyoption review

French Frog's picture

I just read the title of the article and thought to myself: " this will go down in here like a cup of cold sick' lol

DogSlime's picture

Nothing wrong with a cup of cold sick - full of vitamins.  If you like, you can garnish with a sprinkling of earwax and some toenail clippings.  Delicious! :)

...I feel hungry all of a sudden... fancy some pink slime, I think.

Imminent Crucible's picture

When someone says "There is ABSOLUTELY NOT ONE SINGLE SCINTILLA OF EVIDENCE" I know I'm either listening to a lawyer or a liar--but I repeat myself.

Adler willfully overlooks two BIG items. First, the economy looks better than it is because of $200 billion of deficit spending each month this year. As long as the govt is willing to borrow and spend a couple of trillion a year, things are going to look much better than they really are. Does Adler think that can go on forever?

Second, the workforce participation rate has been falling for years. Why would you expect first-time claims to keep rising when the percentage of working-age people with jobs keeps sinking? Is unemployment actually improving? Hard to say, since you have to decide whether two guys working at minimum wage represent a better employment picture than one guy working for $40k/yr.

What isn't hard to discern is that Personal Federal Income Tax Receipts keep trending down. Yet Adler can't see the tiniest indication that the economy isn't improving.

bank guy in Brussels's picture

Ilene does need to explain herself.

On the one hand her main gig seems to be publishing the funny and helpful notes from Phil's Stock World, which talk about how America is run by gangsters driving the whole system into ruin, but in the meantime looking for some good trades while that is happening.

On the other hand she is publishing this strange rah-rah Goldilocks stuff from Lee Adler ... Bernanke and Obama doing a Great Job, ha! ... without so much as a snarky hint there is something suspicious here.

So ... Ilene ... wtf ?

g's picture

Ilene posts drivel, do not bother to read it. Mish has excellent analysis of employment data. Ilene is a progressive and has not borken from the narrow view of left and right, she is just a shill. Tyler you do know that there is no fairness doctrine right?

nmewn's picture

You hadn't heard?...she's part of the MIC...Media Industrial Complex.

wang's picture
wang (not verified) nmewn Apr 13, 2012 7:19 AM

aka Leo Kolivakis

 

nom de plume