Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Friday, July 13, 2012

Jobless Claims


Initial unemployment claims total the number of people in the US signing up for unemployment relief for the first time.  As a series, it has some big advantages: it's a simple total, and not based on a sample survey; it's very timely (weekly) and out within ten days of the day it's calculated.  It also has some disadvantages.  It only represents new claims, and so is only a partial guide to total unemployment, though if initial claims are falling, so typically is the unemployment rate; and because it's weekly, seasonal adjustment is less reliable than it is with monthly series.  Remember that both fall when the economy grows.

The market has attributed the most recent big decline in weekly new jobless claims to seasonality problems: due to low inventories, car companies have postponed their annual plant holiday closedown.  These blokes expect the data to rebound when the car plants do actually shut down.  But the fact that car inventories are low is interesting, is it not?  Car sales have been  growing.  Low inventories leading to increased production and employment is a good thing, no?  A sign of re-accelerating growth, perhaps?

This series does have spikes, caused by bad weather or strikes or whatever -- look at the spike in June last year.  But  ... if the decline persists over the next couple of weeks, or is only partly reversed, it will be clear that "payback" is over and the economy once again growing.

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