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Panic On Claims Not Supported

OK, so the market doesn’t like the claims number, which missed analysts’ estimates by a wide margin. Let’s look at the facts.

Not seasonally adjusted, in other words, actual, claims rose by 102,000. Continuing claims wk ended 12/31 up by 361,000. However, before you get too excited, initial claims were better than last year when same week was up by 194,600. It was also way better than the 157,000  in 2010 and 225,000 in 2009. The continuing claims increase this year was about the same as last year. 2010 was much worse, at an increase of 520,000.

This seems like a not bad report, at least relative to last year. This week is the peak week for claims seasonally, and the trend is bullish with new claims declining at a faster rate than last year.

Initial Claims Chart- Click to enlarge

Continuing state and total claims continue to trend down at about the same rate as the 52 week moving average.

Continuing Unemployment Claims Chart - Click to enlarge
However, this chart, with continuing state and total claims on inverted scale vs. SPX suggests that there might be a problem, especially for stocks, in view of what looks like a trend break. The S&P tends to trend in the same direction as the inverted scale continuing claims.

Note: extended claims are a week behind state claims.

Continuing Claims vs. Stock Prices Chart- Click to enlarge

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