Reuters strangely cheered by statistical noise in economic indicators

The Departments of Commerce and Labor released scheduled reports on the monthly trade deficit (for August) and initial weekly jobless claims today, but I didn’t plan on writing much about either.  They showed no real change from the previous reports in the series, and give no indication one way or the other about the direction of the economy.  That didn’t stop Reuters from offering a relatively cheery analysis, of course, headlined “Claims and trade data suggest modest improvement“.

Let’s start with the actual reports, first on the jobless claims:

In the week ending October 8, the advance figure for seasonally adjusted initial claims was 404,000, a decrease of 1,000 from the previous week’s revised figure of 405,000. The 4-week moving average was 408,000, a decrease of 7,000 from the previous week’s revised average of 415,000.

Last week’s announced figure was 401,000, so this actually represents an increase from that mark — but only a slight one, in the realm of statistical noise.  The decrease from the adjusted figure is even less notable, a change of 0.25%.  It’s essentially a no-change report.  The same is even more true for the trade deficit:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total  August  exports of  $177.6 billion and imports of $223.2 billion resulted in a goods and services deficit of  $45.6 billion,  virtually unchanged from July, revised.   August exports were $0.1 billion  less than  July exports of $177.7 billion.   August imports  were $0.1 billion less than July imports of $223.3 billion.

In  August, the goods deficit  increased $0.1 billion from July to $61.4 billion, and the services surplus increased $0.2 billion to $15.8 billion.  Exports of goods  decreased $0.1 billion to $126.7 billion, and imports of goods were virtually unchanged at $188.1 billion.  Exports of services  were virtually unchanged at $50.9 billion,  and imports of services decreased $0.2 billion to $35.1 billion.

The actual change was around $20 million, from $45.63 billion in July to $45.61 billion in August, which represents a change of 0.044% to the trade deficit.  That’s practically a definition of statistical noise.  Exports actually fell slightly, offset by a slightly larger drop in imports, thanks to a stagnant economy.

Now let’s look at how Reuters reported these economic indicators:

New claims for jobless benefits were little changed last week and the trade deficit narrowed marginally in August, indicating a modest improvement in the economy.

Initial claims for state unemployment benefits dipped 1,000 to a seasonally adjusted 404,000, the Labor Department said on Thursday. Economists had expected claims to rise to 405,000.

A separate report from the Commerce Department showed the trade deficit fell to $45.61 billion in August from $45.63 billion the prior month. Economists had expected the trade gap to widen to $45.8 billion.

I’d really like an explanation of how decreases in both exports and imports indicate “a modest improvement in the economy.”  The scale of the drop is so small that no one can really argue that it portends a move to recession, but it’s certainly not a “modest improvement.”

These reports indicate that the national economy continues on its trajectory for stagnation and moribund job-creating activities.  It’s essentially no change at all, and to the extent that there is any change, it’s not encouraging for future growth.  Reuters would have been better off leaving these reports alone.

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Jazz Shaw 5:31 PM on February 04, 2023