Wednesday, July 18, 2012

Obama Loses 353,000 Jobs in Holiday Week, or Does He: See Tomorrow's New Unemplyment Claims No. for a Clue

Notice I "corrected" the "officially" "reported" 350,000 number of new unemplyment calims released by the Labor Department last Thursday for the EXPECTED 3,000 REVISION in last week's nummber (part of the Labor Department report tomorrow, as the numbre--unrevisedl--of new unemplyment claims to be released tomorrow, for last week, will be rEVISED next Thursday). 

The problem is that the number of new unemplyment claims released last Thrusday, for the week including Juy 4, was a FICTION (and not just becaue of the usual disregard of the expected REVISION this Thursday).  How do we KNOW it was a fiction? It really was "too good to be true"--even though the nummber was not really that good in an abaoluste sense. 

Starting at the end of last year, and beginning of this year, weekly new unemplyment claims fell under 400,000 (by the end of last year),, and SEEMED to "fall" to 350,000 in February (being reported TWICE at 348,000, only to be REVISED tboth times, the next week, to the "official" low of 351,000, which the media FALSELY suggested was succeeded by a new "low' in last Thursday's number of 350,000--above the 348,000 UNREVISED number reported TWICE in February).  That yearly "low" of 351000 was proably misleading, because of WEATHER and what appears to be a new seasonal pattern not fuly, or accurately, reflected in the "seasonal adjustment" made every week to the "raw" number).  Nevertheless, the weekly number fell into a "range" of 350,000 to 3650,000--with several weeks under 3(or around) 355,000.  Then the number SPIKED (starting I , I think, in March) to an AVERAGE of 390,000 for three straight weeks.  That much of a sudden SIKE shuld lead to the conclusion that the 'seasonal adjustments' were NOT operating well. That is because the ECONOMY (remember that) was NOT really chaning that much, although there was a definite "slowdown" in the first quarter of 2012, as compared with the last quarter of 2011.  Gasoline prices spiked upward, but there was still not any aDEQUATE reason for the sudden SPIKE upward to 390,000 (other than the weather and a GlITCH in the "seasonal adjustment").

Okay, after the sudden spke to 390,000 (average) over three weeks, the number fell bck slightly--back to ABOVE the TOP of the previous 350k to 365k range.  Then the number, in May and June, ROSE again to be consistently in the 375k to 390k range, with a bias toward the TOP of that range (380,000 to 390,000).  Most of June again AVERAGED 390,000, or thereabouts.  Then came the report for the week leading up to the week containing July4, where the number of new unempllyment claims "dropped" to 376,000:  not very significant since it was both a "pre-holiday" wek and only ONE week, plus still being in the 375,000 to 390,000 range.  Then came the "unrevised" number of 350,000 released last Thursday.  That was supposedly a droop of fully 26,000:  a MUCH larger drop than has occurred in ANY week in recent months.  Was there some SUDDEN "improvement" in the ECONMY to "explain" this apparent aberratin?  Of courfse not.  Now there is the possible glitch caused by the July 4 holiday.  But at least SOME media reports last week appear to have gotten it right:  The 'seasonal adjustment" to be alpplied last week, and which was applied, contemplates a nuber of SEASONAL "temporary closing" of manufacturing plants for RETOOLING (like auto plants, in prparatin for new models).  That apparently did not occur,--at leastt in the magnitude expected.

In all events, we KNOW thatlast week's numbe was FICTIN, because the "job market" simply does not turn "on a dime" like that, and the magnitude of the "drop" in new unemplyment claims last week was an obvius aberratiion.  The questin is obviusly HOW FAR last week's number of new unemlyment claims was off the mark (as far as indicating where the "job market" actualy is).  Tomorrow will not give us a "final answer", but it shuld give us a CLUE. So far--recognizing that last week wsa FICTIN--the number of new unemplyment claims has NOT IMPROVED this entire year.  If we move quickly back into weekly numbers in the 375,000-390,000 range, that will remain true.  The rest of Juy, and most of August (at least until we approach Labor Day), should give usa fairly good reading on whether the job market remains STUCK.  No, tomorrow will not full "solve" the questin of just how far off last week was, since the weekly number (even without obvius glitches) is VOLATILE. and unreliable.  This weekly unemplyment claim number is only significant OVER TIME.  It is OVER TIME (the entire first half of the year) that th number showed NO IMPROVEMENT this year (from where we were at the beginning of the year).  If the number released tomorrow shoots right back up to the 375,000-390000 range, then we can probably THROW OUT last week's aberratino of 353,000 (or whatever the RVEISED number from 350,000 is).  If the number stays near 350,000, that would be a SURPRISE (and hard to reconcile, snce theere STiLL would have been no sudden "improvement' in the economy).  If the number released tomorrow rises (as expected), but stays below 375,000, there is at least the POISSIBILITY of some small "improvement"--although we will have to wait for future weeks to see if the "improvement' is real, or just statistical "noise". 

This is how you should look at tomorrow's announded number of new unemplymen tcalims:

1.  First, as always, it is an UNREVISED number, and will be REVISED next week (almost always upward, and usually by 3,000 or more, although the revision the past two weeks has been up 2,000).

2.  The number is only ONE "data pont", when it is the onger-term "chart" that matters.  Further, because of teh fallible "seasonal adjustment', the number is NOT a "concrete number". It is an ESTIMATE, and really SUBJECTIVE. 

3.  One or two or three weeks does not a "trend" make.  The number relleased tomorrow will give us some CLUE as to just how much of an aberratin the 350,000 number released the previus Thursday was.  But it cannot show  a "trend'" by itself, or in combination with the past FEW weeks.

4. The present TRND is NO IMPROVEMENT in the job market this entire year:  no improvement in the number of new unemplyment claims as the year has progressed (sort of the opposite, in fact, since early February, but the February-March numbers may have been skewed fictionally low, and so it is safter to say that the present "trend" is that the job makret is STALLED). 

5.  To establish a NEW TRNED (either an imroving trnd or worsening trnd), we are going to have to hav e a few MONTHS of weekly numbers confirming the trnd.  As we go into July an August, as ahappened in May and June, we should get a better idea of where we appear to be headed, and what POSSIBLE "trend" seems to be developng.  Right now, it is really impossible to say, other than the present "trend" of NO IMPROVEMENT has to be assumed to be still in effect. 

P.S.  No proofreading or spell checking (bad eyesight)

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