Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Initial Claims for Unemployment Insurance Are a Wake Up Call Again
In the week ending January 4, the advance figure for seasonally adjusted initial claims reported by the Department of Labor was 330,000, a decrease of 15,000 from the previous week's revised figure of 345,000. But the actual number of initial claims totaled 486,033 an increase of 34,384. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,295,112, an increase of 451,828 from the preceding week. We consider this a negative report and reinforces our conclusion last week that the economy may be slowing. While it is too soon to cry wolf, the optimism of spokesmen for the Federal Reserve and the administration and others appears to us to be wholly unjustified.
On the date following publication of the preceding data, the Department of Labor reported that only 74,000 new jobs were created in December. The financial media were expecting 200.000. This did not deter Mark Zandi of Moody’s, who was reported as saying, “I wouldn’t pay any attention to the (Friday) numbers. It is not consistent with any other data,” he told McClatchy News. “The reality is the economy is creating 200,000 jobs per month. At this pace of job growth, unemployment will decline by half a percentage point this year.” Zandi’s confidence, McClatchy reported was due to last month’s report of over 238,000 jobs created. We reported that as inconsistent with the number of initial claims for unemployment insurance last month, over a million.
But which makes him even less credible is the he pointed to the decrease this week in the number of first-time claims for unemployment benefits, another important workforce indicator, improved again this week, as did their four-week average. The trouble is he was reporting the seasonal adjusted figure and not the actual number, which as we noted last week and in the first paragraph above showed a substantial increase in initial unemployment claims.
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