Jobless claims rise again

posted at 10:55 am on October 22, 2009 by Ed Morrissey

Once again, initial jobless claims have “unexpectedly” risen after a few weeks of slight declines.  The AP, among others, heralded the decrease from the 550K level to 520K as an indicator of economic recovery.  They’re still sticking with that story, although it’s getting harder to justify it with claims increasing:

The number of newly laid-off workers filing claims for jobless benefits rose more than expected last week, after falling in five of the past six weeks, as employers remain reluctant to hire even with the economy showing signs of recovery.

The Labor Department said Thursday that new jobless claims rose to a seasonally adjusted 531,000 last week, from an upwardly revised 520,000 the previous week. Wall Street economists had expected only a slight increase, according to Thomson Reuters.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.

The four-week average of claims, which smooths out fluctuations, fell slightly to 532,250, the lowest since mid-January and about 125,000 below the peak for the recession, reached this spring. But claims remain well above the 325,000 that economists say is consistent with a healthy economy.

We need to keep in mind that unemployment is a lagging indicator of an economy.  Firms shed jobs after the economy turns sour, not usually in anticipation of a downturn.  They show reluctance to hire until employers start seeing increases in business to justify new positions.  The economy will recover before we see a large number of new jobs lower the unemployment rate.

However, initial jobless claims in this stratospheric level indicate that firms are still shedding jobs, not just showing a reluctance to rehire.  The number of unemployed people continue to rise, and many of them are now falling out the back end of the statistics, as the AP acknowledges:

When those [extended benefits] programs are included, the total number of recipients dropped to 8.8 million in the week ending Oct. 3, the latest data available, down about 50,000 from the previous week. That decline is likely due to recipients running out of benefits, rather than finding jobs, economists say.

As this demonstrates, the jobs lost are a cumulative total.  Losing 214,000 jobs in September is not an improvement from earlier this year when we lost 700,000 jobs in a month, because those initial 700,000 jobs are still lost.  It’s a reduction in the rate of disaster, which is better than losing jobs at the same rate, but that isn’t a realistic outcome anyway.  The jobs lost at the beginning of the recession were the ones employers could afford to shed; the ones left now are existential jobs, where the employers either have to retain staff or close doors altogether.

As for the signs of economic recovery, there are a few, but none that come close to hitting home like unemployment.  And it seems unlikely (although not impossible) that the economy grew at a 3% annual clip while shedding this many jobs in the third quarter.


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Comments

Why in God’s name would they go along with a plan that ensures their electoral defeat and a loss of power for their party?

Doughboy on October 22, 2009 at 11:57 AM

This isn’t about the party, it’s about power and ideology, one drives Obama and his admin. and the other governs it. Most of his admin are radical b/c Obama is radical, there’s no other explanation. The ends justify the means, if it takes crippling the US economy to institute “fairness” and a “level playing field” all the while solidifying and perpetuating their power then they’ll do what it takes. Do you think that the pay czar handing out 90% pay cuts is an accident? No, it’s all about instilling fear so that they’ll do your bidding when the time comes.

The folks are far more dangerous that we know – our current problem is that their veil hasn’t fallen far enough yet for most to know who/what they truly are. Dark days ahead….

volnation on October 22, 2009 at 12:09 PM

andy85719 on October 22, 2009 at 12:07 PM

Sounds as sleazy, unethical and as underhanded as an Obama “plan”, but with actual competence in execution added in.

NoDonkey on October 22, 2009 at 12:09 PM

Criminal.

A top White House economist says spending from the $787 billion economic stimulus has already had its biggest impact on economic growth and will likely not contribute to significant expansion next year.

So it hasn’t worked yet, and it won’t in the future.

It’s criminal negligence.

lorien1973 on October 22, 2009 at 12:10 PM

And now Obama wants to “bailout” small banks.

http://www.google.com/hostednews/ap/article/ALeqM5i_WrL-yKI0kVBHbacyZTzSnxQLvAD9BF07580

Of course the commercial real estate market is primed up for it’s credit crisis.
http://blogs.wsj.com/developments/2009/09/01/commercial-real-estates-1-trillion-time-bomb/

Where will the One get the money to bail out that sector?
If you have experience maintaining printing presses, might want to send your resume to the US Mint now. I have a feeling that they will need to add more presses to keep up with the spending.

Hopin’ for some Change in our pockets.

TQM38a on October 22, 2009 at 12:14 PM

Ha. Rush just read that quote, lorien. If that’s the biggest impact, can we say what a waste it was yet?

ORconservative on October 22, 2009 at 12:14 PM

A top White House economist says spending from the $787 billion economic stimulus has already had its biggest impact on economic growth and will likely not contribute to significant expansion next year.

Then since most of it has not been spent, how about repealing the uneaten part of this crap sandwich?

NoDonkey on October 22, 2009 at 12:15 PM

Christina Romer, the chair of President Barack Obama’s Council of Economic Advisers, said Thursday that the $194 billion already spent gave a jolt to the economy that contributed to growth in the second and third quarters of the year. She told a congressional panel that by the middle of next year, the impact of the stimulus will level off. Romer said spending so far has saved or created 600,000 to 1.5 million jobs but warned that unemployment will remain high, above 9.5 percent, through the end of 2010.

txag92 on October 22, 2009 at 12:15 PM

They can’t repeal it, they need it to get these dunces re elected.

ORconservative on October 22, 2009 at 12:16 PM

Das a peace prize!

RightWinged on October 22, 2009 at 12:16 PM

Why in God’s name would they go along with a plan that ensures their electoral defeat and a loss of power for their party?

1. They are like kids raised in a strict home going wild after they get out of the house.
2. This is largely driven by people who are elected from districts where the voters would reelect them even if they screwed a goat on live TV. They are willing to sacrifice the more vulnerable members to get their agenda enacted. They think (and are correct) that if they can enact socialized medicine and all the rest ultimately the Democratic party will hold power for generations. (Although the country will be unrecognizable.)

Aviator on October 22, 2009 at 12:17 PM

As everyone knows unemployment numbers are racist.

jukin on October 22, 2009 at 12:17 PM

Sorry, but China isn’t playing Reaganomics, it’s playing Ponzi scheme.
–andy85719 on October 22, 2009 at 12:07 PM

And, you’re playing politics.

Is China’s manufacturing sector going full-tilt-boogie?… Yes, it is.

Do they have a positive trade balance?.. Yes, they do.

Are their citizens demanding credit?… No, they’re not.

Is the Chinese Government encouraging their citizens to borrow, by regulating lower interest rates?… No, they’re not.

It’s a well known fact, the Chinese citizen SAVES to buy his house, and everything else he wants… In their culture, it’s a disgrace to have to borrow money.

So, basically, they’re practicing Reaganomics.

Ironic, isn’t it.

franksalterego on October 22, 2009 at 12:19 PM

At some point, someone somewhere is going to have to produce something that another individual will willingly pay for.

NoDonkey on October 22, 2009 at 11:50 AM

Someone wrote (Jim Kunstler?), “We’ll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door.”

flyfisher on October 22, 2009 at 12:21 PM

They can’t repeal it, they need it to get these dunces re elected.

ORconservative on October 22, 2009 at 12:16 PM

I naively assumed that Democrats would do what’s best for the country rather than what’s best for their careers.

Whatever was I thinking?

NoDonkey on October 22, 2009 at 12:21 PM

They honestly don’t seem to understand that fewer people working means fewer people are getting paid. It’s tough to see how these stupid people are going to be the ones who come up with a solution.

highhopes on October 22, 2009 at 11:46 AM

Cutting the salary of so many banking executives by 90% is going to wonders for NYC and NY states revenues.

MarkTheGreat on October 22, 2009 at 12:22 PM

Someone wrote (Jim Kunstler?), “We’ll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door.”

flyfisher on October 22, 2009 at 12:21 PM

. . . And then suing them.

Gotta keep the lawyers in business, we’re up to our armpits in them.

NoDonkey on October 22, 2009 at 12:23 PM

I think Barry baby is soon going to wish he were back in Chicago.

ORconservative on October 22, 2009 at 11:41 AM

I’ve been wishing that since 1/20/09.

highhopes on October 22, 2009 at 11:47 AM

I’ve been wishing that since 11/05/2008.

MarkTheGreat on October 22, 2009 at 12:23 PM

NoDonkey on October 22, 2009 at 12:21 PM

I find it exttremely sad that it is not only Dems. The Dems definitely have the rest of the Stim money as a slush fund but looking at whar the elites on the R side have done in NY 23 they don’t give sh** either unless it is about power and money.
My point really is that despite what letter is behind the name and what the candidate says, the next elections require good citizens to look as deeply as possible at the candidate.

ORconservative on October 22, 2009 at 12:31 PM

Obama’s legacy.

Do you like declining influence and increasing joblessness? Keep voting democrat.

daesleeper on October 22, 2009 at 12:43 PM

It’s a well known fact, the Chinese citizen SAVES to buy his house, and everything else he wants… In their culture, it’s a disgrace to have to borrow money.

So, basically, they’re practicing Reaganomics.

Ironic, isn’t it.

franksalterego on October 22, 2009 at 12:19 PM

Chinese make about 40 cents an hour…they save more then the average American does each year…in fact of all the Americans who actually do save, the average Chinese save more per year.
What spurs an economy isn’t credit, it is savings…the savings go to banks, who then loan to business, who purchase machines and hire people.

right2bright on October 22, 2009 at 12:58 PM

The four-week average of claims, which smooths out fluctuations, fell slightly to 532,250, the lowest since mid-January and about 125,000 below the peak for the recession,

Mahhahahahahahhahahahh! They’ve resorted to comparing a moving average “to smooth out fluctuations”…

…which they’ve arbitrarily and conviniently decided was 4 weeks long

…in which 3 of the weeks had miraculously showed a unemployment falling.

…Then they take that genetically engineered apple and compare it to oranges, single single point metrics….

….Hahahahahahahahha, stop AP, your killing me…Mhahahaahahahha

NickelAndDime on October 22, 2009 at 12:58 PM

And it seems unlikely (although not impossible) that the economy grew at a 3% annual clip

And it seems likely (although not certain) that Obama’s lying grew at a 300% annual clip.

MB4 on October 22, 2009 at 1:16 PM

That decline is likely due to recipients running out of benefits

I’ve been harping on that.

Ed! There is a fallacy with that whole “trailing indicator” rubric. It only holds true while the number of unemployed (and or homeless) doesn’t effect equipment orders.

When unemployment reaches level X, it begins to have an increasing effect on equipment orders because the unemployed don’t spend money on the products generated by the whole supply chain.

At that point producers start laying off more people, which lowers the number of orders even further and the downward spiral begins.

We are way past X (the tipping point).

Have you all started tracking the number of homeless yet?

dogsoldier on October 22, 2009 at 1:27 PM

MOre water carrying from MSM and this horrid admin.

“Leading economic indicators” aren’t leading, nor are they a snapshot of the health of the US economy. Profit snalshot for those companies who a) are not hiring, while laying off (net, net more proft) and b) are finding foreign markets are recovering – hence THEIR new hiring and supply/demand.

Cat is a great example. After Bambi claimed they would benefit – CEO corrested him, announced further domestic layoffs – and are sticking with their global plan – sell products and services offshore, while employing more offshore.

IN turn – their stock holds or goes up – whereas markets reflect this in going up.

So, if your unemployed and holding on to that 401k, IRA, ROTH etc – ggod news! Your portfolio is up 15% , yet still down 40-50% from its high.

Dismal failure.

Odie1941 on October 22, 2009 at 1:41 PM

Piss poor employment and earnings news and the equities markets still rally.

I think the tipping point for the equities markets will be an external event (such as a an Israeli attack on Iran’s nuclear facilities). After that they’ll come crashing spectacularly down to Earth.

At that point, investors will lose their appetite for risk and flee to treasuries, gold, silver, and other commodities.

Mike Honcho on October 22, 2009 at 3:20 PM

Who is that poor girl in the picture, still waiting in line ? She looks so sad. Someone get her name for me & I’ll get her a job, I can’t take seeing that look on her face, month after month!

kg598301 on October 22, 2009 at 4:47 PM