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Weekly Unemployment Claims Portend Disaster
Mish's Global Economic Trend Analysis ^ | 01 Aug 2009 | Mike "Mish" Shedlock

Posted on 08/01/2009 9:13:48 AM PDT by BGHater

The Department of Labor Weekly Unemployment Report is now so skewed by abnormalities, it is difficult to get a clear picture. First, let's take a look at the data.

Seasonally Adjusted Data

In the week ending July 25, the advance figure for seasonally adjusted initial claims was 584,000, an increase of 25,000 from the previous week's revised figure of 559,000. The 4-week moving average was 559,000, a decrease of 8,250 from the previous week's revised average of 567,250.

The advance seasonally adjusted insured unemployment rate was 4.7 percent for the week ending July 18, unchanged from the prior week's unrevised rate of 4.7 percent.

The advance number for seasonally adjusted insured unemployment during the week ending July 18 was 6,197,000, a decrease of 54,000 from the preceding week's revised level of 6,251,000. The 4-week moving average was 6,416,250, a decrease of 131,750 from the preceding week's revised average of 6,548,000.
Weekly Claims



click on chart for sharper image

Initial Claims Analysis

One could point at the substantial +25,000 jump in initial claims and conclude things are deteriorating. However, it is difficult if not impossible to know exactly because a huge seasonal adjustment factor beyond the ordinary related to auto manufacturing plant shutdowns skewed the seasonally adjusted numbers.

The unadjusted drop of -78,111 is even more misleading. Moreover, the only way to use unadjusted numbers accurately is on a year-over-year basis and that fails for reasons stated.

Continuing Claims Analysis

Note the huge drop of 131,750 in continuing claims. Ordinarily this might be significant. However, these are not ordinary times. Much, perhaps all of that drop is due to benefits expiring.

Indeed states and federal programs have extended unemployment benefits several times. They do so but do not adjust the headline numbers.

Please look at lines boxed in red for Extended Benefits and EUC 2008. The latter is Federal extensions picking up where states left off. The former is state extended benefit programs.

Note that 2,656,879 people are on extended federal benefits compared to 127,438 a year ago!

In other words, the headline extended claims number of 6,416,250 is off by more than 2.6 million. And one also needs to add in another 352,000 from various state programs.

Still More Considerations

Even though EUC 2008 claims rose by 24,518, one cannot count on that number either because hundreds of thousands have used up all of their extended benefits.

On July 19, I noted 500,000 Will Exhaust Unemployment Benefits by September, 1.5 Million by Year-end.

Unemployment benefits plus extension last 79 weeks in New York, over 1.5 years. Yet, in June alone, for New York alone, 47,000 used up 72 of those weeks, and count on the extra 7.

From the above post, courtesy of Dave Rosenberg:

Record Number See Benefits End



Take a good look at that chart. It's 50,000 now. The expectation is 500,000 by September and 1.5 million by the end of the year. What are the odds Obama creates 1.5 million jobs by the end of the year? Can he really create any? For how long?

Emergency Unemployment Compensation

Inquiring minds may wish to consider the Emergency Unemployment Compensation (EUC) PDF.
EUC is a federal emergency extension that can provide up to 33 additional weeks of unemployment benefits. The first payable week was the week of July 6-12, 2008.

The original extension passed in July 2008 paid up to 13 weeks of additional benefits. Effective November 23, 2008, we can pay up to 7 additional weeks of benefits.

Effective December 7, 2008, we can pay up to another 13 weeks of benefits.
With that backdrop, here are some custom created charts courtesy of Chris Puplava at Financial Sense, based on my request. The charts show the effect of the EUC program over time.

Continuing Claims Since 2000



Continuing Claims Since 1970




Continuing Claims as % of Population Since 2000



Continuing Claims as % of Population Since 1980



Chris notes "The EUC and the extended benefits come out with a lag as Moody’s had data for them only up to 07/11/09 while the continuing claims data is up to 07/18/09. The charts above are through 07/11/09."

Thanks Chris!

Unparalleled Continuing Claims

On a percentage of population basis this recession is unparalleled.

Making matters worse, the US consumer was nowhere near as leveraged to real estate in 1980 or 1982 as now. Also note that boomers are heading into retirement now, undercapitalized and looking for jobs, in effect competing against their kids and grandkids for jobs.

Look at the average age of baggers in grocery stores or greeters at Walmart. These people are not working because they want to; they are working because they have to. Demand for jobs is at an all time high while the number of available jobs and the pay scales of those jobs have both collapsed. The employment situation is not only an unmitigated disaster, things are about to get worse with pending state cutbacks.

Because of expiring claims, continuing claims data will soon start looking better. The reality however, is things will get worse for another year as unemployment soars into double digits. My forecast in January was 10.8% in 2010 while the Fed's was 8.5%. I see no reason to change mine, but the Fed upped theirs.

The implications for housing and especially commercial real estate are ominous.


TOPICS: Business/Economy; Government
KEYWORDS: economy; mish; thecomingdepression; unemployment

1 posted on 08/01/2009 9:13:48 AM PDT by BGHater
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To: politicket

ping


2 posted on 08/01/2009 9:19:43 AM PDT by 444Flyer (The Lord is a warrior, the Lord is His name.-Exodus 15:3)
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To: BGHater

The MSM doesn’t want to hear this. They want to hear green shoots.

In all seriousness, Mish’s blog is quite good.


3 posted on 08/01/2009 9:19:59 AM PDT by cowtowney
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To: BGHater

Figures do not lie, But Liars Figure.


4 posted on 08/01/2009 9:26:18 AM PDT by Texas Fossil (The last time I looked, this is still Texas where I live.)
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To: BGHater
I fully admit that at this time I have no evidence for the following statements: governments so manipulate their statistics to the point of falsification that it is rash to believe them and, it is a waste of time to use them for any sort of calculation. It is incredibly rash to use them as a base for any serious decision.

In short my kiddies the B*stards are liars! The aforementioned statement is a matter of public knowledge beyond refutation!

5 posted on 08/01/2009 9:40:12 AM PDT by AEMILIUS PAULUS (It is a shame that when these people give a riot)
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To: Texas Fossil

The local NYT-owned fishwrap had doom and gloom headlines on those occasions that the growing economy briefly slowed during W’s two terms. Now that Zero is president, they have glowing and hopeful headlines whenever the economy, which is in freefall since inauguration day, slows a bit in its fall.


6 posted on 08/01/2009 9:47:15 AM PDT by RightWingConspirator (Impeach Zerobama and send him back to his land of birth, Kenya)
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To: cowtowney
They want to hear green shoots.

Bamboo starts out as green shoots, too, but it will grow through it's victim as sure as the Sun rises in the east...

Sometimes, green shoots indicate danger, and death.

7 posted on 08/01/2009 9:48:00 AM PDT by PugetSoundSoldier (Indignation over the sting of truth is the defense of the indefensible)
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To: RightWingConspirator

The New York Times has been a horrible newspaper since before the Civil War.

They were named “conspirators” in electing a radical Administration back then.

There is NO paper in the U.S. that deserves more to go-out-of-business than the New York Times.

They are currently on my “Traitors to the Nation List”.


8 posted on 08/01/2009 9:54:46 AM PDT by Texas Fossil (The last time I looked, this is still Texas where I live.)
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To: BGHater

The recent “rally” in the stock market was a classic bear market rally. The DJIA is going to head down to 3800 by mid to late 2010.


9 posted on 08/01/2009 11:39:56 AM PDT by Signalman
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To: BGHater

http://www.collinsreport.net/2009/07/09/obama%e2%80%99s-numbers-falling-as-fast-as-unemployment-is-climbing-media-predicting-14/


10 posted on 08/01/2009 1:59:12 PM PDT by jmaroneps37 (Conservatism is truth. Liberalism is lies.)
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