Thursday, August 19, 2010

The Jobless Claims Story: Back Over 500k; Spin, spin, spin!

The picture says it all:

And what does the financial media say? "Applications for unemployment benefits in the U.S. "unexpectedly" increased last week to the highest level since November, showing companies are stepping up the pace of firings as the economy slows".

Unexpected to whom exactly?

Futures instantly dropped as the numbers were released.

As Econoday puts it: "Weekly jobless claims are very likely to offer the very first hints that the economy is sinking into a double-dip recession — that is if it does sink into a double-dip recession. Let's start with the last double dip: the recessions of 1980 and 1981-82. The graph above tracks initial jobless claims (red line), measured by the month-end four-week average, against the non-farm payroll count (blue line).

Claims, where high numbers are bad and low numbers are good, jump from about the 400,000 level to over 600,000 by mid-year 1980, fall back to the low 400,000s during the intervening non-recession period of late 1980 through mid-year 1981, then gradually climb to a late 1982 peak of 650,000. Meanwhile, non-farm payrolls, where high numbers are good and low numbers are bad, fall below 90 million during the 1980 recession, recover to 91.5 million during the non-recession period, then take a plunge below 89 million near the end of the 1981-82 recession."

And the financial media continues to spin a "recovery".

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