Weekly unemployment claims increased to 465,000 last week rising by 12,000. The number was above analyst expectations, although it shouldn't have been.
Weekly unemployment claims almost always have a significant drop around major holidays and then rise afterwards. This happened right on schedule for the Labor Day weekend. The last major drop was around the July 4th weekend. It was reported today that the four-week moving average is now the best since late July. Somehow, mainstream media reports failed to mention the reason for this was because both periods contained major holidays. The major reason for the holiday drops is that the bureaucrats responsible for processing the claims and reporting the numbers seem to take longer vacations than anyone else. Nine states were missing data for the week before Labor Day, so the numbers had to be 'estimated'. For some reason, this very important piece of information didn't appear in press reports either.
What the press did report was that weekly unemployment claims were suddenly improving and this was evidence the economy wasn't falling into another recession. This was an amazing analysis considering a claims number under 400,000 would be needed to justify that statement and the best number around Labor Day wasn't even below 450,000. Furthermore even the most casual examination of the claims data shows that claims have been consistently in the 450,000 to 500,000 range all year. So instead of reporting "Not Much Changes in Employment Picture" or "Weekly Claims Improve As Usual Because of Holiday", the press fell all over itself to report a big improvement in the U.S. employment picture. The only thing they left out was cheerleaders in the background and audio that intermittently said 'rah, rah, rah'. Stocks rallied strongly on the surprising news that seemed to indicate a strengthening economy.
Maybe the mainstream media had already pre-written their articles about the 'recovery summer' that the administration had promised and didn't want to waste good copy. As for the recovery summer, there was essentially no change in weekly unemployment claims, or in the overall unemployment rate. Claims are somewhat better now though than they were a year ago when they came in at 538,000. It took around $1.5 trillion of on-the-books deficit spending to achieve the improvement to 465,000. Apparently a trillion dollars of borrowed money just doesn't go as far as it used to.
Disclosure: No positions.
Daryl Montgomery
Organizer, New York Investing meetup
http://investing.meetup.com/21
This posting is editorial opinion. There is no intention to endorse the purchase or sale of any security.
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