Media Sees Record Low Unemployment Claims As All Good- Here’s Why It’s Not
The headline, fictional, seasonally adjusted number for initial unemployment claims came in at 294,000, which was not materially more than the Wall Street conomist crowd consensus guess of 290,000. It was a non event.
The actual, not seasonally finagled numbers, which the Wall Street captured media ignores, shows claims continuing at all time record low levels. The condition has now persisted for 16 months. I have warned for months that this implied that the central bank financial engineering/credit bubble has been at a dangerous juncture.
The media echo chamber continues to present record lows as positive, stubbornly ignoring the historical fact that extremes like this have always led to severe market and economic contractions. The Wall Street Journal subhead today suggested that it was all good. “New Claims Held Near 14-Year Low Last Week, Signaling Continued Improvement in Labor Market.” Nowhere was there any mention of the actual number of claims for the week or how that number compared with the comparable week in prior years. Bloomberg also made no mention of the actual number of claims.
The Department of Labor prominently reports the actual unadjusted data clearly and illustrates it in comparison with the previous year. It is only the media who chooses to ignore reality. In this case, we can’t blame the government.
According to the Department of Labor the actual, unmanipulated numbers were as follows. “The advance number of actual initial claims under state programs, unadjusted, totaled 425,399 in the week ending
January 3, an increase of 35,581 (or 9.1 percent) from the previous week. The seasonal factors had expected an increase of 41,457 (or 10.6 percent) from the previous week. There were 488,537 initial claims in the comparable week in 2014. ”
Initial Claims and Annual Rate of Change
The actual week to week change last week was an increase of around 36,000 as seasonal retail and other service workers were laid off after the holidays. This is less than the average increase for that week of the prior 10 years, which was an increase of approximately 46,000.It was virtually the same change as the weekly claim period of 2014.
Actual first time claims were 12.9% lower than the same week a year ago. The normal range of the annual rate of change the past 4.5 years has mostly fluctuated between approximately -5% and -15%. The trend continues with no sign of slowing.
These numbers persisted at extreme levels at the tops of the last two bubbles for a year before the collapses got rolling. The foundations were already beginning to crumble by the time the first anniversary of record readings rolled around. The current condition has persisted for 16 months. Maybe this is the new normal. Or maybe its a warning of an even bigger, badder adjustment ahead.
Initial Claims and Stock Prices
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The monthly unemployment numbers are an important economic indicator for the health of the economy, but what they don't show is the increasing number of people who are underemployed, or working only part time. The following link shows a chart that includes underemployed and part timers, as well as the traditionally unemployed. www.stateofworkingamerica.org/.../number-of-underemployed/