Wall Street Pulls Its Pud Over Headline Jobless Claims Data

Behind the initial claims headline number, the real story was a bit different (nothing new about that).

Bloomberg was frothing at the mouth with this headline…

… while amazingly failing to note that that was the year the economy began to collapse from the weight of the massive credit and housing bubbles that preceded. Today, in fact, initial claims as a percent of the eligible employed have been at peak bubble fake jobs levels since last September (which I have dutifully been pointing out in these semi regular reports). While the media was just noticing this stale fact, this week the data actually began to come off that extreme. Bloomberg, along with all the other Wall Street propaganda organs and the Street conomist shills are seven months behind the curve, possibly just as things may be starting to go the other way.

The trend is still heading down, so it’s too soon to make that call. But every major trend starts with one step. I’m looking for that first step. Noticing a fact seven months late when a market is turning is about as useless as information can get.

Initial Claims As Percent of Eligible – Click to enlarge

Bloomberg reported, “Jobless claims increased by 2,000 to 304,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007.” The median guess of conomists surveyed by Bloomberg was for a headline number of 315,000. Woohoo. They missed on the high side. The market’s knee-jerk reaction to this “better than expected” news was to rally. 

The headline number is seasonally adjusted silliness for people who don’t want to be bothered with looking at the actual data. The Department of Labor (DoL) dutifully provides that in detail on page two of the weekly updates.

The DoL reported the actual number of claims reported by the 50 states:

“The advance number of actual initial claims under state programs, unadjusted, totaled 317,701 in the week ending April 12, an increase of 17,512 (or 5.8 percent) from the previous week. The seasonal factors had expected an increase of 16,022 (or 5.3 percent) from the previous week. There were 359,415 initial claims in the comparable week in 2013.”

The weekly change was minimally better than the 10 year average for that week of  an increase of 20,508, but it was much worse than the comparable week of 2013 which saw a gain of just 1,800, and 2012 which saw a decline of nearly 20,000. By those standards, last week wasn’t that great. On a year to year basis, the decline was 11.3%, which is in line with the recent trend.

Initial Jobless Claims Versus Stock Prices – Click to enlarge

While the trend is still generally favorable, we have to stop and think. “If new claims have been at a level comparable to the top of the housing bubble for the past 7 months, is the current bubble extended to a similarly dangerous degree?”   I suspect that the answer is yet, but as always, timing is everything. The claims trend began to deteriorate a full year or more before the prior housing and credit bubble began to fall apart. This time there has been no clear trend of deterioration in claims yet. As we closely watch the actual data from week to week, we’ll be the first to spot it while the Wall Street establishment is still pulling its pud over the headline numbers.