Initial claims drop in latest week
Government report shows 550,000 first time claims for jobless benefits were filed last week, fewer than forecast.
http://money.cnn.com/2009/08/06/news/economy/initial_claims/index.htm?postversion=2009080610I love how the media "spins" the weekly unemployment report.
Let's dissect it - again.
Continuing claims is the key number. It rose 69,000 from the week previous on a seasonally-adjusted basis.
But look down the table in that report. 139,291 people rolled off the continuing claims numbers into "extended benefits."
Extended Benefits
491,684
352,393
+139,291
http://www.dol.gov/opa/media/press/eta/ui/current.htmThose folks are still unemployed, yet they understate the continuing claims number by a whopping 140,000.
This is the distortion that creeps into the numbers, and over time it gets quite ugly. What's worse is that we're now starting to see people drop off the extended programs, and this will accelerate into August and beyond (although Congress is threatening to extend those benefit times once again.)
The market spiked on the release but again, the issue for the economy is consumption going forward. Government money dumps ultimately must be funded and while this has so far "worked", it cannot continue forever.
Only the actual number of people who do not have a job matters, not those who are claimed in some headline release.
In order to support an economic recovery people need purchasing power - that is, jobs!
Beware buying the hype; euphoria feels real good while you're on the right side of it, but the hangover can truly suck when the drugs wear off.
http://market-ticker.denninger.net/
