Comments on: What is the recent increase in U.S. jobless claims telling us? http://www.creditwritedowns.com/2009/02/what-is-the-recent-increase-in-us-jobless-claims-telling-us.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: The Wikinvest Daily Angle » What the Recent Increase in US Jobless Claims is Telling Us http://www.creditwritedowns.com/2009/02/what-is-the-recent-increase-in-us-jobless-claims-telling-us.html#comment-4068 The Wikinvest Daily Angle » What the Recent Increase in US Jobless Claims is Telling Us Mon, 23 Feb 2009 09:04:32 +0000 http://www.creditwritedowns.com/?p=6181#comment-4068 [...] Today’s Daily Angle comes from Wikinvest Wire member Edward Harrison of CreditWritedowns.com. You can read the full article on Edward’s blog. [...] [...] Today’s Daily Angle comes from Wikinvest Wire member Edward Harrison of CreditWritedowns.com. You can read the full article on Edward’s blog. [...]

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/02/what-is-the-recent-increase-in-us-jobless-claims-telling-us.html#comment-4002 Edward Harrison Thu, 19 Feb 2009 19:49:03 +0000 http://www.creditwritedowns.com/?p=6181#comment-4002 David, You make a great point about normalizing the numbers. I have a note to self on one of the greatest apps invented Evernote saying: Not apples to apples due to manufacturing concentration/leaner inventory blah blah and size of economy. Basically, I wanted to work in some themes I didn't have space for. The important one is the theme you broach on the population growth since the severe downturns in 1974 and 1982. These recessions were worse on a normalized basis. But, one must caveat that statement for a couple of reasons. The U.S. economy was much more manufacturing based back in the 1970's and early 1980s so you were guaranteed to see more layoffs because hiring patterns in the manufacturing sector are more cyclical. Plus, we have a much leaner manufacturing cycle now, with Just-In-Time and all of that. Even in the energy sector, you can see stockpiles of crude, blending components or final output are much lower now than they were in the 1980s. All of which is to say it's hard to make a apples to apples comparison. That said, jobless claims are a much better metric than the unemployment rate which has been manipulated. The scary part, as you say, is that there is no clear indication we have reached the zenith. Even when one looks at year-over-year comparisons, they are not getting substantially better, which means the unemployment rate increase is accelerating to the upside. Thanks for your input. Ed David,

You make a great point about normalizing the numbers. I have a note to self on one of the greatest apps invented Evernote saying:

Not apples to apples due to manufacturing concentration/leaner inventory blah blah and size of economy.

Basically, I wanted to work in some themes I didn’t have space for. The important one is the theme you broach on the population growth since the severe downturns in 1974 and 1982. These recessions were worse on a normalized basis.

But, one must caveat that statement for a couple of reasons. The U.S. economy was much more manufacturing based back in the 1970′s and early 1980s so you were guaranteed to see more layoffs because hiring patterns in the manufacturing sector are more cyclical. Plus, we have a much leaner manufacturing cycle now, with Just-In-Time and all of that. Even in the energy sector, you can see stockpiles of crude, blending components or final output are much lower now than they were in the 1980s. All of which is to say it’s hard to make a apples to apples comparison.

That said, jobless claims are a much better metric than the unemployment rate which has been manipulated.

The scary part, as you say, is that there is no clear indication we have reached the zenith. Even when one looks at year-over-year comparisons, they are not getting substantially better, which means the unemployment rate increase is accelerating to the upside.

Thanks for your input.

Ed

]]> By: David Pearson http://www.creditwritedowns.com/2009/02/what-is-the-recent-increase-in-us-jobless-claims-telling-us.html#comment-4001 David Pearson Thu, 19 Feb 2009 18:39:53 +0000 http://www.creditwritedowns.com/?p=6181#comment-4001 Great analysis, but I would normalize the numbers for growth in the employed population. I believe they will look, on the one hand, more benign, and on the other, scarier (because we have further to go before topping out). This is true of normalized claims data presented by Calculated Risk. It appears from that data that weekly claims should rise to one million to reach '74/'82 levels. Other data supports the conclusion that this recession will be at least as deep as those two, so one should expect weekly claims to spike in the coming months. The counterargument is that, perhaps, the increase in joblessness this time will be shallower and longer, so that we'll never reach those claims highs. I disagree with this view because we've experienced essentially a housing recession (from 12/07 to 9/08) followed by a deeper, steeper economy wide recession. Great analysis, but I would normalize the numbers for growth in the employed population. I believe they will look, on the one hand, more benign, and on the other, scarier (because we have further to go before topping out).

This is true of normalized claims data presented by Calculated Risk. It appears from that data that weekly claims should rise to one million to reach ’74/’82 levels. Other data supports the conclusion that this recession will be at least as deep as those two, so one should expect weekly claims to spike in the coming months. The counterargument is that, perhaps, the increase in joblessness this time will be shallower and longer, so that we’ll never reach those claims highs. I disagree with this view because we’ve experienced essentially a housing recession (from 12/07 to 9/08) followed by a deeper, steeper economy wide recession.

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