Wednesday’s report on initial jobless claims was fairly jolting: claims slid by 35,000 to 466,000, when the Street was expecting a much smaller 10,000 decline. What struck me as odd, and which I highlighted at the time, was the wide discrepancy between the seasonally adjusted figure, that 35,000 drop, and the unadjusted number, which showed claims rising by 68,000 to 544,000.
That’s a more than 100,000 swing. Why such a wide divergence? This weekend, via John Mauldin’s “Thoughts From the Frontline” newsletter, we get an answer:
What is happening is that we are coming off of wickedly high numbers in 2008 and a seasonal number that was much lower in the preceding years. It is another part of the Statistical Recovery. And this trend is likely to keep on for the rest of the quarter. My friend John Vogel, who analyzes the unemployment numbers for me each week, shows pretty convincingly that the average for this current quarter will be over 500,000 per week on a non-seasonally adjusted basis. This is less than a 10% drop from last year for the same quarter. Job losses are continuing to mount, and we are on our way to an 11%-plus unemployment number by next summer. Statistical Recovery, indeed.
So, again, I ask you, which number feels more like reality? The drop by 35,000, or the rise of 68,000?
The thing that will really make a difference here is business expansion, corporate America creating actual jobs, not the three-month “make work” jobs the government is creating (or saving, or creating and saving, it’s so hard to tell what they’re actually doing these days.) So far, it ain’t happening, not in kind of appreciable size. Small business is the key here, and small businesses are still getting pinched.
I’ve got some information of that topic, small business, that I haven’t been able to get through yet, so I may have something on this this week.
