So much for "sideways," jobless claims jump to 500k

[Pretorian]

The American middle class was economically unsustainable

Was or is? Could you please define "middle class" , what is it in your opinion-- people that own their houses and have a certain income?

[TonyPrep]

Where did you get your data, rocdoc? And what do the lines on the chart represent?

From the census data, it looks like sales were rising in the few months up to April but have slid away since.

It has always struck me as odd that over the past 6 months or so, whenever I am visiting in the US and have the need to drive to a mall that there seems to be no parking and the shops/restaurants are full. This just did not make sense to me when you read the doom and gloom on Bloomberg each day….effectively suggesting there is no recovery and the economy is in the tank. I just plotted up something that is interesting in light of the unemployment plot….retail sales. The graph shows sales for January through June from 2002 to 2010. It is pretty obvious there is an uptick since 2009 suggesting some recovery…at least to the level of sales in mid 2007. So why the discrepancy with the jobs data? Are more and more people buying on credit, hoping for recovery and a new job? Is there more and more underground economy in motion (i.e. no official jobs but money available to spend). I certainly don’t have the answer but it makes me wonder if the economic nabobs really understand what is going on.

[rockdoc123]

Its US Census data, downloaded from that site. I had to dig around a bit to get the right spreadsheet.
Note that this is the data that is "adjusted" I'm assuming for seasonal variability. I'm on the wrong computer right now so will have to find the link later. Each of the lines represents a year through the first two quarters in order to compare to 2010.
To be honest I'm somewhat baffled by the data. I read one thing on Bloomberg and then go looking for the backup data and it seems to suggest something different. I suspect this is somehow related to the volatility out there....the market is moving on pretty much any news and not taking time to evaluate it. My broker continues to scratch his head over the whole mixed message thing going on out there.

[TonyPrep]

If you look at the press release for July, the "increase" in July (from June) was not statistically different from zero (see the footnote). The May to June figure was -0.3% (with a 0.2% margin of error, which I guess means it was definitely down but may have been only 0.1% down, but up to 0.5% down) and, from the chart, the April to May figure was -1%. So the last three months figures have not been following the trend of the previous months.

[kmann]

I have always considered 500k to be a "red flag" number. If it holds at or above that number, bad things could be in store. One explaination is that census workers are being laid off at a rate of about 30-40k per week so this number is inflated by about that much. I think by the middle of fall things will be more clear, if this is trouble coming or not.

[TonyPrep]

One explaination is that census workers are being laid off at a rate of about 30-40k per week so this number is inflated by about that much.

That assumes that those 30K-40K census workers are all filing initial claims.

[OilFinder2]

Just a footnote . . .

When looking at something which measures numbers in absolute size (such as unemployment claims) and comparing it with historical numbers, it is always useful to take into account the relative size of those absolute numbers.

For example, 500K initial jobless claims sounds bad, but when you take into account the growth in the size of the labor force over the decades, it's not as bad as it looks.


Source

[TonyPrep]

Just a footnote . . .

When looking at something which measures numbers in absolute size (such as unemployment claims) and comparing it with historical numbers, it is always useful to take into account the relative size of those absolute numbers.

For example, 500K initial jobless claims sounds bad, but when you take into account the growth in the size of the labor force over the decades, it's not as bad as it looks.

Right. I'm sure that makes those half a million new jobless people feel a lot better.

The words "straw" and "clutching" come to mind.

[OilFinder2]

^
It wasn't supposed to make anyone feel better, it was just supposed to provide some perspective.

[Sixstrings]

It wasn't supposed to make anyone feel better, it was just supposed to provide some perspective.

Oilfinder, then what do you even mean by "cornucopia, abundance, and prosperity?" Perhaps you should add the caveat "for the top 5%." People are getting confused here, as you continue to ratchet down your standards for "cornucopia."

I always thought the cornies would at some point admit they're wrong. It didn't occur to me that they'd just keep lowering the bar.

[Pops]

Isn't it funny how you can find evidence of just about any pov?

This is a plot of the employment to total population ratio.


Bigger, Calculated Risk

This one is interesting too, don't know what it means - maybe I need a Sugar-Mamma?


Bigger, Calculated Risk

[Sixstrings]

Isn't it funny how you can find evidence of just about any pov?

This is a plot of the employment to total population ratio.

At first glance, that chart makes it look like things aren't quite as bad as the recession in '83. However, 2010 is a fully two-income world.. in the early 80s, we were just beginning that transition to two-income families (men and women working hasn't made the pie bigger, they just both now split what used to be a man's salary).

This one is interesting too, don't know what it means - maybe I need a Sugar-Mamm?

As women entered the work force on a serious level, the employment pie did grow somewhat but the fact is women also took jobs from men. Add to that, "men's work" has seen greater lay-offs and offshoring than female-dominated fields.

And so, both parents must work to maintain the same middle class lifestyle that one breadwinner used to. Not only did the middle class not gain moentarily, but young children are looked after in daycare. Only good thing here is that women have the same opportunities in life as men, but you have to wonder if the American family hasn't suffered for the absence of women in the home.

Maybe unemployed men can take on the previously feminine role of "homemaking," but you have to admit that culturally and psychologically men just aren't built for that. Think about it, have you ever heard men in at a bar talking about diaper rash and cookie recipes?

[OilFinder2]

Oilfinder, then what do you even mean by "cornucopia, abundance, and prosperity?" Perhaps you should add the caveat "for the top 5%." People are getting confused here, as you continue to ratchet down your standards for "cornucopia."

I always thought the cornies would at some point admit they're wrong. It didn't occur to me that they'd just keep lowering the bar.

You are free to re-read my reply to you a few weeks ago about comparisons between unemployment claims now and after the 1974 recession.

[OilFinder2]

Isn't it funny how you can find evidence of just about any pov?

This is a plot of the employment to total population ratio. . . .

OK, fair enough.

At the link below is a chart showing initial unemployment claims adjusted to the entire population (not just the size of workforce):
http://www.blytic.com/Player.aspx?key=0 ... 14a6f45c8f
^
At the bottom, scroll the time bar over to the left and you get the data going all the way back to 1967. Notice the red line did not get as high as it did after the 1974 recession, and only got a little higher than it did in the 1981-82 recession. So, if we look at initial unemployment claims compared to the entire population, at their recent peak they weren't nearly as bad as in 1974. And right now they're at about the same level they were in mid-1983 and late 1976.

[Pops]

That's a cool site, OF!

A person could go through there and find all sorts of green shoots...
Look, the cost of housing has gone down since this last little economic speed bump, that's a good sign.

I can't figure out how to get charts out tho...

[OilFinder2]

I knew Sixstrings would bring this up.

I'm not going to explain it in detail because I doubt anyone here will believe it, but today's number - and the initial claims from the past few weeks in general - are an artifact of the seasonal adjustment process. Specifically, the fact that there were fewer than normal layoffs (and initial jobless claims) in July due to GM not furloughing so many workers during the model year changeovers, has resulted in a much-smaller-than-normal decline in not seasonally adjusted claims between the 2nd week of July and the current week. The smaller-than-normal decline in NSA numbers has resulted in a rising SA number.

I can show you the calculation if you want to see it, but as I said, I doubt anyone will believe it, or at least they will dismiss it all away. If I am right (and once you see the #'s it becomes pretty obvious), this will begin to correct itself in about a month, maybe less.

So, I will once again put my money where my mouth is: $50 says that by the last week of September, the seasonally-adjusted initial unemployment claims number will be back below 475,000. Bet goes to the first taker.

Tolda ya so!!!

>>> Jobless claims drop 31,000 to 473,000 <<<

[TonyPrep]

In that same article:

The four-week average of initial claims -- a better gauge of employment trends than the volatile weekly number -- actually rose slightly, up 3,250 to 486,750.

Remember that revisions also play a part, with the previous week's number being revised to 504,000 initial claims.

[OilFinder2]

I absolutely, definitely could be wrong, but according to my calculation we could see a big drop in initial unemployment claims tomorrow morning (the seasonally adjusted "headline" number). I'm looking at somewhere around 450K (from last week's 472K, which will probably be adjusted up to around 475K), but it might even be as low as 420K. Anything more than about 465K, and something funny's going on that needs to be watched for a few more weeks.

EDIT: Hmm, I think I was looking at the wrong week. It could be closer to 460K. We'll see. Anyway I'm working on a model to predict initial unemployment claims for the rest of this year. But it needs tweaking with several more weeks of data.

[OilFinder2]

^
Told ya so! Damn I'm good.

>>> Jobless claims decline by 27,000 to 451,000 <<<

[gnm]

I wouldn't start cheering just yet Oily. Lets wait for the "revised" number shall we? Especially considering that 9 states (including CA) were "estimates" - apparently they didn't have real numbers. And 7 of those states were estimated by the Fed.

-G

edit - fixed typo