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Ray was right -- the Obama Recession Begins!
Howard Richman, 1/30/2013

On January 15, Ray Richman wrote on this blog (Obama Recession Begins? Unemployment Claims Escalate):

The number of actual initial claims for unemployment insurance totaled 552,043 in the week ending January 5, an increase of 61,944 from the previous week. The press did not report this figure. Instead, they reported a figure of 371,000, a figure 181,043 lower. The 371,000 figure was the advance figure for seasonally adjusted initial claims, an increase of only 4,000 from the previous week's revised figure of 367,000. To be charitable to the media, 371,000 was the figure headlined by the Bureau of Labor Statistics of the US Department of Labor when announcing the availability of its weekly report. But it is apparent that the media reported the data without reading the first page of the report....

Weekly applications are a proxy for layoffs. The seasonally adjusted figures have fluctuated for most of the past 12 months between 360,000 and 390,000. Until October, 2012, the actual figures ranged similarly in the first ten months of 2012 but beginning in October they escalated from 360,000 to the latest report figure of 543,000, which ought to have created concern.

This morning, the Bureau of Economic Analysis (BEA) confirmed Ray's reading of the unemployment claims tea leaves. They announced that GDP actually declined during the fourth quarter of 2012. Here is the beginning of the BEA press release:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

On January 15, Ray explained the likely cause:

Employers appeared to dislike the results of the national election. And the poor results of the seasonal Christmas business seems to accord with what was really happening in the labor market. We do not pretend to know why unemployment increased in November and December but the timing suggests employer unhappiness with the election results.

Ray was paying attention to the changes from one week to the next. He spotted the fact that right after the election businesses stopped hiring. Those who voted for Obama are about to get the economy that they voted for.

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