Consensus forecasts had expected a modest fall in initial unemployment claims this week; instead they increased by 15,000. Similarly, continuing claims rose by 29,000.
Bloomberg still tried to put a happy face on this not-aligned-green-shoots story. This was the third and longest paragraph of a mere four paragraph report:
Recent economic data shows some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, and the Federal Reserve said yesterday after a two-day meeting in Washington that the economy’s slump is “slowing.” Even so, companies have been loath to hire new employees, in part because they are waiting for sustained gains in demand.
Reuters, by contrast, opted for just the facts:
The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week and the number staying on the rolls after collecting an initial week of aid also edged higher, government data on Thursday showed.
Initial claims for state unemployment insurance increased by 15,000 to a greater-than-expected seasonally adjusted 627,000 from a revised 612,000 the week before, the Labor Department said. Analysts polled by Reuters had forecast claims to drop to 600,000 from a previously reported 608,000.
The heightened focus on jobless claims results from the fact that a turn to reductions has been found in past recessions to be a coincident indictor of recovery. However, that experience has been for normal inventory driven downturns, not financial crises. Both the US Great Depression and Japan’s post bubble era featured a phase after the initial financial implosion where the real economy appeared to be stabilizing and most observers believed a sustained recovery was in the offing. Instead, both countries moved into a second leg of the downturn. The countries that did come comparatively quickly out of a financial crisis dealt aggressively with their banks and were also able to depreciate their currencies and use an export boom to restart their economic engines. The US is not using either of these remedies. Yes, the dollar has weakened, but not to the degree that it did in the other cases, such as the Nordic countries in their banking crises, and China has made clear it won’t tolerate much of a fall. In other words, an attempt to use trade in a major way to get us out of our mess would likely trigger competitive devaluations and/or protectionism, a negative sum game.
That’s a long-winded way of saying one should exercise ample caution in reading the tea leaves for this contraction using patterns for traditional inventory-driven downturns.
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Mercantilists are exporting unemployment as fast as they can
i wonder when somebody on the Hill will figure out that this free trade/globalization thing never really was free trade/globalization.
Since Rome is burning, I say we have some fun with the dollar at China's expense. I say we announce we are pegging the dollar to the Chinese yuan.
Think of the iterative fun we could have. The yuan is pegged to the dollar which is now pegged to the yuan. No matter WHAT we do with regards to printing, the dollar holds its value vs the yuan.
I think we are looking at unemployment reaching some sort of terminal velocity, looking at some of the detail and comments there are some mixed messages. Firstly it would appear that there are so few jobs left in the car industry and construction that the rate of job losses is declining and even improving in some cases where idled factories are started up again. The warning lights are most definitely still on for warehousing and transportation which kind of ties in with train volumes reported recently. What interested me was the note that services and agriculture are mentioned. So what we have is a wave of unemployment spreading from one sector to the next and eventually back to the start.
Again we have seen some unbiased reports coming out of Bloomberg today and some that gloss over the facts. If you were of the green shoots persuasion you could have pointed out that the decline was less if you took out the seasonal adjustment for the first time in a long time. As for the mercantilist exporting unemployment then I suspect there is a grain of truth in this as the likes of export tariff reductions help to make certain imports more competitive.
YS:
"Just the facts"? Yes Sergeant Joe Friday.
It is telling that Yves' antennae are also implicitly comparing our current mess w the Great Depression. IMO Even the Japan post-bubble experience is inadequate for comparison, because chronic Japanese economic weakness and deflation helped fuel the US boom of the 90s. I believe that WW II excepted, the current period is the first since the 1930s where global GDP is dropping, whereas it needs to rise about 1% just to stay unchanged on a per capita basis.
The service economy experiment is quickly losing its appeal as the answer to the manufacturing driven workforce. The professional service workers having overspent for educational papers for entry find themselves excess with little hope as they network,twitter and scan various self employment scams for a viable income source. The two income household is fading and with it goes the consumer economy.
Awww, didn't the real economy get the memo, fer crissakes?
But really, I don't know how anyone not delusional could be surprised by this uptick. There is no recovery. Here, let's try that again: THERE IS _NO_ RECOVERY. Nothing in the real economy which supports 'recovery,' 'hiring,' 'profits,' 'new markets and sales.' The fact that the worst and earliest hit sectors, housing and manufacturing, have slowed their decline is unremarkable. But the near certain probability that the drop of money in motion and paper wealth in the economy and the country on the whole is shrinking demand and driving seconday employment losses is historical certainty which we now repeat. A certain ninny at the Federal Reserve and a smooth-signaling coterie in and about the White House talk about 'shoots of hope.' They're salesman, not analysts: wherefore the surprise that their view isn't on the level?
As Yves nicely encapsulates in the post, the US is following the exact pattern of the best historical comparables, i.e. a brief slowing after the first near catastrophic wave of losses, followed by continuing major declines.
mxq: "Mercantilists are exporting unemployment as fast as they can." *hahahahahahah* I'm sorry friend but that's just, j- *heeheeheeheehee* Just how are those dastardly Chinee doing that, given that US imports from China continue to decline? Really my friend, can we not face our own problems as problems of our own design? The actions of the Chinese may pose a problem, but they are assuredly not _the_ problem, and they are not even a major problem compared to any twenty others we could talk about, and do, here.