Thursday, December 3, 2009

Weekly Jobless Claims Fall Below 500K Again. Or Did They?

As we prepare for the monthly fiction that is the jobs report tomorrow morning [Nov 6, 2009: Official Unemployment Rate Hits 10.2%; Reality is Far Higher], Zerohedge posts a damning piece on the "good news" that has been the weekly unemployment claims figure.  There has been some celebration of late on financial entertainment TV that we've crossed the rubicon below 500K weekly jobless claims (in and of itself a horrific figure in any normal economic time).  But the truth... oh the truth.... it hurts.

There are these nasty little details of where the unemployed are being stuffed ... too inconvenient to talk about on mainstream news sources, because it might put you in a dour mood.  You see, as the weekly claims figure has dropped from 462,000 Americans last week to 457,000 this week (green shoots, a 5000 person drop!) the (hidden in dark corners where only mushrooms grow) Emergency Unemployment Compensation exploded up by 265,000 Americans.  Yes you heard me, a quarter million people... in a week. Shhhh... not so loud.

[click to enlarge... but quietly, mind you]

What the heck is EUC you say?  CNBC has never mentioned it?  Shocker.

  • The EUC program was created on June 30, 2008, by the Supplemental Appropriations Act of 2008 (P.L. 110-252). It made up to 13 additional weeks of federally-funded unemployment benefits available to unemployed individuals nationwide who had already collected all regular state benefits for which they were eligible and who met other eligibility requirements.

    • On November 21, 2008, the Unemployment Compensation Extension Act of 2008 (P.L. 110-449) expanded EUC to 20 weeks nationwide and created a second tier of 13 more weeks of EUC for individuals in States with high unemployment rates.
    • On February 17, 2009, the President signed the American Recovery and Reinvestment Act of 2009 which extends the period of time during which claims for EUC can be filed and benefits paid.

So if you are not following what is happening... people are falling off the traditional claims as they have exhausted "traditional" lengths of stay, and our EUC (all our extensions combined) are exploding higher. I assume some of these people are those who lost benefits, but are coming back into the system... and others are those who just ran out of traditional benefits and morphing into the new list seamlessly.  Hence if you only focus on the traditional measurement tools, you smile as Kool Aid runs over your lips.  If you deal in reality... you turn your smile upside down.


As we've been saying for a long while, so many people have now been unemployed for so long, our traditional measures are becoming less and less useful.  Some have headed to welfare [Jun 22, 2009: WSJ - Numbers on Welfare See Sharp Rise] , some have chosen the permanent disability route (these figures are also exploding higher) and others are being hidden in emergency acts of extension.  [Aug 4, 2009: NYT - By Year's End, Benefit Lifeline to End for 1.5 Million]  Not that I have a problem helping people who cannot find work in an a broken Ponzi scheme economy, but can we at least have the facts out in the open?  Open democracy and such? I mean wouldn't that the be a key role (dispensing facts) for financial entertainment TeeVee?


Ok then.

For more fun and games, head over to FTAlphaville to see how TrimTabs is absolutely mocking the US Bureau of Labor Distortion Analysis, in terms of accuracy.  Not only are they getting it correct, but TrimTabs data is immedate.  We much prefer wrong information ... because it always seems to be wrong in the "understating the depths of our problem" direction.  Funny that.

TrimTabs Investment Research estimates that the U.S. economy shed 255,000 jobs in November, the fifteenth consecutive month job losses exceeded 250,000. 

That's not what our government says TrimTabs.

In a research note, TrimTabs explained that wages and salaries are continuing to drop sequentially. TrimTabs estimates based on daily income tax deposits that wages and salaries fell 4.6% year-over-year in October and 5.3% year-over-year in November. 

That's not what our government says either - they say wages are flat to growing slightly.  Someone's pulling a fast one here, and I always trust it is not the government when given a choice. (wink wink)

TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees. Historically, TrimTabs’ estimates have been more accurate than the initial estimates of the Bureau of Labor Statistics.

That sounds like a far too logical of a way to estimate... using actual income tax data?  No, no no - much better to have government statisticians guess each month how many new businesses are created, and hence alter data upward by 100-150k jobs a month through wonderful creations like the birth/death model. [Jan 27, 2008: Monthly Jobs Report & Birth Death Model]   That helps to get the stock market giddy on "better than expected" data, and then you can revise it down to the "truth" quietly 30, 90, 180 days later when no one pays attention.  

“At this point in the economic cycle, the private sector should be taking over from the government, but that is simply not happening,” said Biderman. “Not only is the economy not creating jobs, it is still shedding one million jobs every three to four months.”

Mr. Biderman has apparently escaped the Matrix. Or he uses sensible math.

So what's the takeaway with that fancy "math" you use sir, based on actual data that makes sense?

The BEA is overstating wages and salaries because it is using survey data that is four to six months old to estimate current wages and salaries,” said Biderman. “American consumers are in far worse shape than the BEA’s data indicates.”  

Oh BEA, my BEA.....

Amazingly, the market heaves and jerks to every utterance by these government agencies, as if there is actual accuracy to them.  And this folks is why all these websites trying to analyze government data to try to pose a snapshot of what is really going on are suffering from garbage in, garbage out.  I refuse.

One must ask why don't we outsource our measures of unemployment to TrimTabs who seems to do a far better job the first time around, versus the BLS which gets it severely wrong and takes months if not a year+ to get anywhere close to TrimTabs data.  Don't answer was a rhetorical.... after all what is 1 million extra unemployed Americans between friends?

[click to enlarge... but take your blue pill immediately after viewing]


Back to my rat hole...chewing on my blue pill, ready to buy stocks with great joy for some nonsensical CNBC inspired reason tomorrow because the "charts are awesome".

[Aug 14, 2009: No New Normal Say Some Economists, Prosperity Without Jobs?]

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