Friday, October 30, 2009

U.S. Jobless Claims Are Above 500,000 For 42 Consecutive Weeks

The U.S. Department of Labor announced today that U.S. initial jobless claims were reported today: 530,000 (as of October 24), above the expected number. Says the news release:

"In the week ending Oct. 24, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 1,000 from the previous week's unrevised figure of 531,000. "

However, David Rosenberg, Chief Economist of Gluskin Sheff, today said that the stock market is currently trading at valuation levels consistent with claims of only 400,000. The peak in the 2002 recession was 517,000, and this was right after 9/11.

This has only been worse in the 1982 recession, when the claims were above 500,000 for 48 weeks. However, we have a higher population and workforce now. At that time, the government just needed to raise rates to break inflation and solve the problem a solution that is infeasible today.

Also, the median age of the boomer back then was 25, now it is 52. Credit growth at the time was accelerating, not contracting as is the case now. The situation is significantly weaker today.

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