Four-Week Average First Time Claims For Unemployment Nudged Up

Updates

February 7, 2014: Reuters posts a more nuanced analysis of the unemployment report. I think analysts are missing the big story here, however. Analysts are trying to use the numbers to predict where the economy is going in 2014 and what the fed might do in February, March, and April. I think the big story follows from the first sentence at the linked article:

U.S. job creation slowed sharply over the past two months, turning in the weakest performance in three years and raising the prospect that the economy may be losing momentum.

Parsing that one sentence:

• US job creation slowed sharply
• data over two past months (a trend?)
• weakest performance in a very long time -- three years 

I don't know how far folks want to go back in time; some will want to go back to Bush II to blame him for everything. I doubt most rational folks will go back more than five or six years in any economic cycle. So, forget politics, and just think back five or six years. If after five or six years, job creation in the US has turned in the weakest performance in three years one has to ask the question: are "we" riding the right horse?

Someone defined insanity as doing the same thing over and over and expecting a different result. If one does not change horses after five or six years after seeing no improvement in job creation, there are only a few possibilities:

• the movers and shakers don't want things to improve; they are happy with the status quo
• the movers and shakers feel they are on the right horse; more time is needed; the ideology is correct
• the movers and shakers are simply stubborn; they won't change course simply out of stubbornness
• the movers and shakers have run out of ideas / solutions for the tectonic changes taking place
• the movers and shakers have not identified the tectonic changes taking place

Rush Limbaugh would likely suggest it all has to do with the first point. The president's press secretary would suggest the second point. I think the third point affects everyone; it's hard to admit one is wrong.

When I first started investing in 1980, I thought the world ran on energy and on information and that's where I focused my investments. Somewhere around 1998 - 2002, we went through an information revolution; maybe it began with Apple's ad in 1984; maybe it ended with the dot-com implosion on March 10, 2000. The information revolution is now evolutionary, i.e., evolving steadily and somewhat predictably. On the other hand, we have just entered the energy revolution. I suggest that the current energy revolution began in 2013 when Saudi Arabia publicly stated that the shale revolution will affect them and OPEC adversely. Saudi backtracked on that to some extent, but the genie was out of the bag. Boone Pickens and Harold Hamm are riding the wave but can't get the President or Congress to join.

I don't think a single data point helps a whole lot in trying to predict the future, but when one gets the worse number in three years, one has to ask why? I think that's the big story, the big question that economists are failing to answer or even explore.

If Janet Yellen and the Fed simply react to the jobless reports on a month-by-month basis and fail to provide some opinionated guidance to the administration and Congress, I think she and the Fed will have let us down. Perhaps that's not their mandate, to offer advice, but certainly common sense suggests their input might be helpful.

Original Post

Yahoo!Finance is reporting that the first time claims for jobless benefits dropped 20,000 in the last week of January. The number: 331,000, seasonally adjusted, whatever that means. I used to seasonally adjust the results of my biology experiments in Biology 101 when they didn't come out as expected. Dr Froiland frowned on that. That would have been Augustana College, Sioux Falls, South Dakota, many years ago.

In the earlier report, Reuters had reported that the four-week average, a more reliable indicator, had actually nudged up. But that little fact was conveniently removed in the updated story. I'll have to look for it. If I recall it nudged up about 325 to 330,325.

The previous week number was also revised upward by 3,000 but that was also removed from the earlier story. And so it goes.

I'm always impressed that they can get the number that precise ... 325.

Just out of curiosity, thinking about "seasonally adjusted" again, what was the number one year ago?  

• February 7, 2013: 366,000

After another trillion dollars in stimulus, one year ago, 366,000; this year 331,000. At this rate, ...