Thursday, July 9, 2009

Stat of the Day: Weekly Jobless Claims Plunge

The weekly jobless claims for the week ending July 4th were 565K. Substantially lower then expectations around 605K. Being the first week below 600K since January, this was substantially bullish news. The media has trotted out numerous economists to tear down this report as not as good as the headlines due to either holiday shortened week or seasonality issues with autos. Either way, the shortened week and seasonality issues should've been captured in the estimates.

CNBC summarized as follows (never mind that the numbers don't add up):

  • The department's seasonal adjustment process expected a large increase in claims from auto workers and other manufacturing workers, the analyst said. Since that didn't occur, seasonally-adjusted claims fell.
  • The non-seasonally adjusted figure increased by about 17,000 to 577,506 initial claims.

David Maki from Barclays talks to Bloomberg about the jobless claims report and his expectations for unemployment. Its interesting that he expects job gains towards the end of the year and 3% GDP growth for the 2nd half. Again, nothing you'll hear in the media. Everybody wants to talk about the recession yet the US is likely starting to grow at a decent clip. Just about every economists no matter his view expects growth in the 2nd half of at least 1.5% and some closer to 4%.

Again, big recessions tend to lead to strong recoveries. Everybody wants us to repeat the weak jobless 2003 recovery after a weak recession. Its different this time. We've had a long protracted recession with huge job losses. Its going to be alot easier to hire people once the turn becomes rooted.

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