Jobless Claims At 5-Week High; Back To The Misery Index; GDP Forecast Continues To Rise -- July 2, 2015; Forecast Way Off -- Part I

Six years into the recovery, and a gazillion dollars in stimulus and this is what we get: even apologists are starting to report reality.

Reuters headline:  Weak U.S. employment report dampens September rate hike hopes.

Business Insider:  Initial jobless claims rise more than expected

Bloomberg Business is reporting: Jobs Report Disappoints, Participation Rate Falls to Lowest Since 1977.

A reminder, these are the "magic numbers":

First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation)

New jobs: 200,000 (< 200,000 new jobs: economic stagnation)

Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters. 

The original "200,000" was revised downward to "125,000" after President Obama took office. I will stick with 200,000 (the "magic number" prior to the Obama administration) -- it's a nicer, "rounder" number to remember.

So, what do we have today?

First, the Bloomberg Business article:

The U.S. labor market took one step forward and one back in June as job creation advanced while wages stagnated and the size of the labor force receded.

The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimate. The jobless rate fell to a seven-year low of 5.3 percent as more people left the workforce.

No one even cares that the unemployment rate dropped to 5.3%. Everyone knows -- the decrease was due to fact that folks have quit looking for work. 

I particularly enjoyed the Business Insider story: never even mentioned that initial claims surged 10,000. Nowhere in the article did the writer say the number surged, simply leading with:

Initial jobless claims rose to 281,000 last week, more than expected.

Economists had estimated that claims for unemployment insurance fell slightly to 270,000 last week, from 271,000 in the prior period.

Folks forecast that initial jobless claims would actually decrease slightly this week. Instead, initial claims surged.

And then the spin:

In a note to clients after the release, Barclays economists wrote: "The four-week moving average of continuing claims now stands at 2.253mn (previous: 2.238mn) and the insured unemployment rate at 1.7% (previous: 1.7%). On balance, we are looking through the volatility in this week’s report and view historically low labor market separations as indicative of solid labor market fundamentals." 

So, this is the spin. If the initial claims drop, it's a sign that the Obama plan (whatever it is, is working); if the initial claims surge, it's "volatility" and simply something to look past. 

Reuters was the only one to note:

Adding to the employment report's soft tone, 60,000 fewer jobs were created in April and May than previously reported.

At least 432,000 people dropped out of the labor force, pushing the unemployment rate two-tenths of a percentage point lower to 5.3 percent, the lowest since April 2008.

And none of the major news outlets reported this: jobless claims at 5-week high. Regular readers know that major news outlets never fail to mention "recent history" if the numbers are good, but no one, except this hard-to-find site mentioned that jobless claims at 5-week high.

The number of Americans filing new claims for unemployment benefits increased by 10,000 to 281,000 in the week ended June 27th from 271,000 in the previous week.

The 4-week moving average was 274,750, an increase of 1,000 from the previous week's unrevised average of 273,750.

Enough of this. I think I get the picture.

And, no, the Fed is not going to raise rates after this report.

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GDP Now

Link here:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 2.2 percent on July 1, up from 2.1 percent on June 25.

The nowcasts for second-quarter growth in real equipment and nonresidential structures investment increased slightly following this morning's construction spending release from the U.S. Census Bureau and the Manufacturing ISM Report on Business from the Institute of Supply Management.