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Okun Shrugs With Productivity Plunging, Labor Costs Surging, And Claims Improving

Tyler Durden's picture


Initial claims were expected to rise modestly to 355k from last week's noisy 344k print (which was revised up) but instead (seasonally-adjusted of course) they improved to 340k (from a revised 347k). However, non-seasonally-adjusted claims rose at their fastest rate of the year. Adding further confusing salt to the wound, as we noted here, it seems Okun's Law is broken, with productivity dropping at its fastest since Dec 2008, unit labor costs surging at their fastest since in 11 months - and all with GDP going nowhere and initial claims improving.

Non-Seasonally-adjusted claims surged the most in 2013...


as Productivity and labor costs diverged...


Charts: Bloomberg

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Thu, 03/07/2013 - 09:50 | 3308367 GetZeeGold
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It's OK.....there's a lot of laws being broken right now.

Thu, 03/07/2013 - 09:54 | 3308384 tarsubil
tarsubil's picture

Indeed, the Law of Gravity has nothing on the power of pixie dust and positive thinking.

Thu, 03/07/2013 - 10:07 | 3308417 spastic_colon
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besides, the S&P 500 still hasn't set a new all time high yet, they must have rebalanced it with the wrong stawks / s

Thu, 03/07/2013 - 10:05 | 3308374 Randall Cabot
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"productivity dropping at its fastest since Dec 2008, unit labor costs surging at their fastest since in 11 months - and all with GDP going nowhere and initial claims improving"

Those productivity and GDP numbers must be wrong

Thu, 03/07/2013 - 15:27 | 3309525 SkottFree
SkottFree's picture

Just more Obamanomics happy days are here again happy news for the masses of Belivers of the New Messiah!

They can now point to the paper and say "Happy Days are here Again" see it says so right here. Things are getting better even though unemployment is up, food stamps are up, no ones hiring, GPD way down, but hey the fed is still printing money so what could possible go wrong?

Thu, 03/07/2013 - 09:53 | 3308376 Yen Cross
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  The trade balance looks like crap, and both Claims #s were revised higher. This bait and switch game is real old.

Thu, 03/07/2013 - 10:03 | 3308389 LawsofPhysics
LawsofPhysics's picture

That which cannot be sustained won't be.  Now that it is a "global eCONomy" exactly who is the earth trading with and what are they offering us in exchange of real value?  Printing 188 million dollars an hour is what is maintaining the status quo in the U.S.  God only knows how much yuan is being created out of nothing.  "Winning" - hedge accordingly folks, it is all you can do anyway.

Thu, 03/07/2013 - 09:53 | 3308379 Silverhog
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No mention of all the crappy weather we had when the claims drop.

Thu, 03/07/2013 - 10:01 | 3308398 Rainman
Rainman's picture

Why does all that up-and-down chart porn remind me of Japan ?

Thu, 03/07/2013 - 10:03 | 3308400 Quinvarius
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Nothing is going to improve until gold goes up.  Why would anyone put money into a crud economy during a printfest when gold is on fake sale during that same printfest?  You make gold unattractive by putting the price where it belongs, not by trying to rig the market lower.  No one is that fn stupid.  They did it in the 80's to save the economy and the currency.  They will have to do it again.  It is what works.

Thu, 03/07/2013 - 10:04 | 3308409 LawsofPhysics
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So you are asking for true "price discovery" in the land of "mark to fantasy"?   Bah ha ha ha ha ha ha ha!!!

Thu, 03/07/2013 - 10:29 | 3308425 Quinvarius
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The thing about gold is that it will happen anyway.  It has that physical component with easy storage that makes it money.  All low gold prices/supplies do is destabilize national currencies and national debt. 

I can't think of a worse situation than having your currency in a bubble vs gold, and then having a national debt and stock bubble riding on top of that. 

Thu, 03/07/2013 - 10:31 | 3308457 LawsofPhysics
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Will. Not. Happen.  You are asking for transparency in a rigged "market".  Just as with the collapse of the former Soviet Union there will be mulitple markets, one "official" market and another market altogether, call it a black market if you like.  The price of physical assets in the latter will begin to reflect their true price, but that is it.  The world has been here before and the issue of available energy will be a major problem, along with fresh water and other essentials.  While the world has "been here" before, it hasn't been here with 7+ billion people.

Thu, 03/07/2013 - 11:09 | 3308545 Quinvarius
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Yeah.  It will happen.  Governments always devalue vs gold in the end because it is the easy way.  For one reason or another, it is always the answer.  Only CNBC watching idiots don't realize it is inevitable and already happening.

They will never let a two market system happen in the US.  There is too much power and profit to be lost doing that.  By saying otherwise, you are saying for profit banking system will decide to leave world finance and just play a meaningless game of Monopoly in the corner. 

Thu, 03/07/2013 - 12:46 | 3308996 LawsofPhysics
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"They will never let a two market system happen in the US"  LMFAO!!!

I paid a plumber in silver for running some lines for me last summer.  Right, you really believe that no one is doing business "under the table".  Halarious.

Thu, 03/07/2013 - 10:03 | 3308403 Hongcha
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Short SPY again, here and now.

Thu, 03/07/2013 - 10:14 | 3308427 Village Smithy
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Thank you Kevin but I really don't want to make it easy for you. You'll need to use some of the $185 million, that your boss just printed in the last hour, to drive up the SPY. Running stops has run it's course, I hope.

Thu, 03/07/2013 - 10:05 | 3308411 cosmictrainwreck
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Thu, 03/07/2013 - 10:06 | 3308413 scatterbrains
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Oblahblah said buy stocks at the bottom in 09,  now he says things will get bad now that the sequester kicked in. I'm just curious when they'll  start revising all the numbers to look worse in compliance with Oblahblah's wishes (not that there not bad already) but when do they go the other way with the revision games ?  He has the Dow at all time highs so mission accomplished? What are they waiting for ? Maybe momo needs to fade naturally ? btw 14 RSI on SPY combined with volume looks as ugly as I've ever seen it with this latest break out. If not for the fed holding it up this whore of a market looks like it's about to crash and burn.

Thu, 03/07/2013 - 10:09 | 3308420 Jason T
Jason T's picture

my guess is hours were cut again.. productivity growth has sucked these past 3 years now.  

Thu, 03/07/2013 - 10:15 | 3308428 Shizzmoney
Shizzmoney's picture

I'm so mad I didn't buy the shit out of bitcoin last year.  100 bitcoins at $4/pc would of netted me an $18,000 profit.  Anonymously.

Thu, 03/07/2013 - 10:27 | 3308450 LawsofPhysics
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Wake me when I can buy diesel for my tractors with bitcoins.

Thu, 03/07/2013 - 10:18 | 3308435 Village Smithy
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Productivity declining is the consequence of adding imaginary workers to the payroll. Labour input seems to rise without any accompanying growth in production. Sorry Mr. President but you can't have it both ways.

Thu, 03/07/2013 - 11:03 | 3308567 Never One Roach
Never One Roach's picture

How do you count 'productivity' of all those vendors standing in the malls at their tiny booths selling cell phone packages, junk jewelry, fake watches, etc?

Thu, 03/07/2013 - 11:13 | 3308613 Hohum
Hohum's picture

Isn't productivity merely a measure of output/labor input?  It doesn't really factor in, for example, output/energy input.  Super labor productivity also might not employ the poor that everyone on ZH cares so much about.

20th century agriculture is a great example of massive labor productivity but terrible energy productivity.  It substituted energy for labor.  And labor went to do other work.

Now, if productivity doesn't rise, that may suggest we cannot even substitute energy for labor effectively.  What to do then?

Thu, 03/07/2013 - 11:15 | 3308621 Dead Canary
Dead Canary's picture

Okun's beard trimmer strikes again.

Thu, 03/07/2013 - 11:27 | 3308686 azzhatter
azzhatter's picture

Let's take this sucker to 15,000 this week

Thu, 03/07/2013 - 11:49 | 3308771 archon
archon's picture

Yeah, but Okun's Law is more like a "guideline" than an actual law....

Thu, 03/07/2013 - 14:14 | 3309285 WhiteNight123129
WhiteNight123129's picture

This phenomenon has a name.

Reflation. Wages rise faster than productivity. Corporation invest not because they have good projects but because they are losing money on their treasuries. Nominal GDP increases but most of it is inflation and nominal tax revnues also.

I love it.

Thu, 03/07/2013 - 18:59 | 3310456 RKDS
RKDS's picture

So is productivity dropping because workers are hobbled by inadequate equipment/policies or because workers are fed up with producing more wealth for less pay?

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