The actual unmanipulated data on weekly first time unemployment claims paints a picture of a US economy that is in a bubble that is boiling over, driven by the massive central bank money printing campaigns and ZIRP.
The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 283,000. The Wall Street conomist consensus guess was 295,000.
Rather than playing the headline number expectations game, our interest is in the actual, unmanipulated data. Tracking the actual total of state weekly counts is the only way to be to see what’s really going on. The Department of Labor reports the actual unadjusted data clearly and illustrates it in comparison with the previous year. The mainstream financial media ignores that data.
According to the Department of Labor the actual, unmanipulated numbers were as follows. “The advance number of actual initial claims under state programs, unadjusted, totaled 278,986 in the week ending
February 14, a decrease of 45,213 (or -13.9 percent) from the previous week. The seasonal factors had expected a decrease of 24,353 (or -7.5 percent) from the previous week. There were 322,761 initial claims in the comparable week in 2014.”
This year’s performance was stronger than average for that week of February. The actual week to week change was a decrease of 45,000 (rounded). The 10 year average for that week is a decrease of -38,000 (rounded). This year’s decrease compared with a decrease of 38,000 in the comparable week of 2014, and just -11,000 in that week of 2013. This hints at trend acceleration
Looking at the momentum of change over the longer term, actual first time claims were 13.6% lower than the same week a year ago. This too is on the stronger side of the normal range of the annual rate of change. Since 2010 the change rate has mostly fluctuated between -5% and -15%. There is no sign of the trend weakening yet and the recent data suggests some strengthening.
Employers are hoarding workers. Businesses have been unusually reluctant to cut employees. In fact, initial claims are at all time record lows in terms of the number of claims per million workers at 1,981. This is 15% lower than at the top of the housing bubble and 23% below the top of the tech/internet bubble. The current numbers are so extreme that they suggest the excessive optimism that characterizes the end stages of economic booms and bubbles.This is the most extreme such behavior in the history of this data.
This come on the heels of the long running US oil/gas bubble, which peaked in the middle of last year and has since collapsed. The impact of that price collapse is starting to show up in state claims data.
While most states show the level of initial claims well below the levels of a year ago, in the oil producing states of Texas, North Dakota, and Louisiana, unlike most states, claims have recently been above year ago levels. North Dakota claims first increased above the year ago level in early November. Louisiana reversed in mid November. But as recently as mid January, claims in Texas were still lower than the year before.
In the most current state data, for the February 7 week, week to week claims rose by 5.7% nationally. In Texas they rose 13.6%, in Louisiana 9.8%, and in North Dakota 7.2%. These increases are probably just the tip of the iceberg, with more layoffs and ripple effects to come.
With its huge and widely diversified economy, Texas could be the harbinger of things to come for the entire nation as the ripple effects of the oil collapse and the disappearance of those $85,000 per year jobs spread through the US economy.
I track the daily real time Federal Withholding Tax data in the Wall Street Examiner Professional Edition. The growth rate of withholding taxes is now running at an annual rate of gain of about 6.5% in real terms, adjusted for the trend rate of increase in workers’ weekly incomes. This is a record growth rate relative to the past dozen years. It too has the feel of an economy that has reached the boiling point.
The big actors in the economy are partying like it’s 1999. The tech bubble topped out in 2000 and the recession followed. The housing bubble peaked in 2006, but the damage did not begin to scare businessmen, policy makers,Wall Street and mainstream pundits until late 2007, and the real collapse followed a year later. The clock is ticking toward a similar end today, and this time the central banks will be hard pressed to engineer another credit bubble recovery.
While we have been teased with signs of change in the claims data from time to time, the trend is still in force and may even be picking up speed like a runaway freight train. This data will encourage the Fed to engage in the charade of pretending to raise interest rates sooner rather than later. I’ve covered the conundrum inherent in that charade in the current Radio Free Wall Street program.
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