Initial Claims Celebrate a Year At Record Levels

The headline, fictional, seasonally adjusted number for initial unemployment claims of 293,000 surprised Wall Street economists a bit this morning as their consensus guess had been 300,000.

The actual, not seasonally finagled numbers, which the Wall Street captured media ignores, shows claims at all time record levels, slightly below the levels reached at the top of the housing/credit bubble in 2006. This continues 12 months of near record readings or record readings. Since September 2013 when the number of claims first fell to a record low, the data has suggested that the central bank financial engineering/credit bubble has been at a dangerous juncture. But thanks to their slavish and idiotic focus on only the made up seasonally adjusted (SA) numbers, news media press release repeaters have given little indication that by historical standards the numbers have represented a danger sign. The media echo chamber continues to present record lows as positive, rather than the danger sign that it is.

Here are the actual unmanipulated numbers and the data showing why those numbers are so troubling.

According to the Department of Labor, “The advance number of actual initial claims under state programs, unadjusted, totaled 238,539 in the week ending September 20, a decrease of 3,533 (or -1.5 percent) from the previous week. The seasonal factors had expected a
decrease of 13,214 (or -5.5 percent) from the previous week. There were 255,087 initial claims in the comparable week in 2013.”

Actual initial unemployment claims were 6.5% lower than the same week a year ago. The normal range of the annual rate of change the past 3.5 years has mostly fluctuated between approximately -5% and -15%. The current number is on the weaker side of trend norms but there are no real signs of weakening yet.

The actual week to week change last week was unremarkable, at a decrease of 3,533. There’s no seasonal pattern in the third week of September. It’s a swing week in which claims sometimes increase and sometimes fall. The average of the prior 10 years for that week was an increase of 7,485.

New claims were 1,716 per million workers counted in August nonfarm payrolls. This compares with 1,780 per million in this week of 2007, which was when the housing bubble was starting to deflate, and 1,919 per million in the comparable week of 2006, around the top of the bubble. In the first week of September 2013, this figure set a record low. In each ensuing week over the past year the numbers remained at or near record levels. This week they did so again.

These numbers persisted at extreme levels at the tops of the last two bubbles for a year before the collapses got rolling. The foundations were already beginning to crumble by the time the first anniversary of record readings rolled around. Today’s situation is similar to those, but there are few signs yet in other indicators that the economy or the market are on the verge of similar collapses. On the other hand, the continuation of this trend will continue to encourage the Fed to continue to pull the punchbowl. It is that action that triggers the collapse of the house of cards built with Fed paper.

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Picture from Geralt at Pixabay.