The market reacted strongly to initial unemployment claims jumping from 488,000 to 500,000. But on a not seasonally adjusted basis claims actually fell from 424,504 to 4o1,856. In recent weeks the seasonally adjusted claims have been somewhat distorted because GM did not have its usual seasonal shutdown of plants this year. This was also reflected in the very strong industrial production report. So it would be better to not react so strongly to the rise in initial claims to 500,000. GM operating its plants through the usual summer shutdown does distort the data, but it is also a sign that the economy may not be as weak as people suspect.
I did not report on this yesterday, partially because I had told my paying clients that the market was extremely vulnerable to disappointing economic news so the negative market reaction was in line with what I expected. But Ken suggested I report on this. For example, this was my chart of the month sent to clients a few weeks ago showing that spot inventory problems were emerging in a few sectors like computers, communication equipment, department and hardware stores. Overall, inventories are not a problem, but selected areas are emerging as problem to watch closely.
i dont get it…if GM was running when it normally wouldnt be, shouldnt have the seasonably adjusted claima also have been lower anyhow?
This week when it normally would have been time for GM to return to work the seasonally adjustment factor would have expected a big drop in claims. When that did not happen the seasonally adjustment would overstate the level of claims.
I dunno spencer. GM usually shuts diown for just a couple of weeks, and with much of the new work force being outside the prior union contracts, they are not immediately eligible for unemployment benefits.
It appears the summer adjustments are actually for students leaving school, and not the GM (and other auto manufacturers) shut downs. I guess we can wait for the eventual adjustments, but they can usually make changes quite quickly before as we have seen after estimating .
Why aren’t we talking about dropping the eligibility age for social security and medicare as part of an aggressive jobs and stimulus package? I’d think new college grads would be enthusiastic about getting older workers out of the way and employers would welcome the chance to replace expensive experienced employees with cheaper new hires.
Oh right those darn bond vigilantes. When will they quit buying TBills irrationally? When will we quit accomodating their irrationality with our policies?
so it would seem that the previous week’s adjusted claims would have been similarly understated?
Mosfets are lengthening in lead times with no capacity being added.
Think you got the GM issue backward. Claims would have been hirer were it not for them staying open in August.
We will have to see what happens when they reach 90 days of inventory. Working through vacation is no indicator of stability.