William Gates and William Marshall
links for 2008-02-01

One Swallow Does Not Make a Summer, But...

Atrios flags briefing.com's report on the slightly worrisome initial unemployment weekly claims seasonally adjusted number:

Briefing.com: Initial Claims

Briefing.com: Initial Claims:


  • Initial claims surge 69K to 375K in the week of January 26.
  • Continued claims rose 47K to 2.716 mln in the week of January 19.

Key Factors

  • Poor seasonal adjustment helps explain the volatile January levels -- strong adjustment early in month but absent in this latest week.
  • Pulls 4-week average back to 326K   Should find a more accurate weekly level in the coming weeks.
  • The 4-week average of continued claims fell for a second week (after thirteen weekly gains).
  • Some increased clarity after the unbelievably low early year initial claims levels.

Big Picture

  • Seasonal adjustment provided some volatility early in the year as the over-adjustment for post holiday workers left a 300K level and under-adjustment (we hope) in the latest week left a surge to 375K.  The 326K 4-week average provides a better read but may also be low given the 340Ks seen in December.... Claims provide a nearly real time read on layoffs and the labor market as the employment report reflects the broader combined read of layoffs and hiring.  A 360+K level for the 4 week average has been consistent with recession -- 362K in 1990 and 373K in 2001....

  • Initial jobless claims measure the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signalling slowing (accelerating) job growth. On a week-to-week basis, claims are quite volatile, and many analysts therefore track a four week moving average to get a better sense of the underlying trend. It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth...