Wikinvest Wire

Jobless claims rise sharply

Thursday, February 25, 2010

The Labor Department reported that weekly jobless claims rose from 474,000 to 496,000 for the week ending February 20th, the highest total since last November.

The four-week moving average, used to smooth week-to-week volatility, also rose to a three-month high, up from 467,750 to 473,500 as shown below where recessions are indicated in gray, the mid-2009 end date of the last recession estimated based on consensus forecasts.
IMAGE Part of the reason for the increase last week was the weather-related delay in processing new unemployment insurance claims in the mid-Atlantic and New England states, however, this does not substantively affect the moving average which is now headed upward again.

How long this recent trend lasts is anyone's guess, but it is worth noting that the current level of jobless claims was exceeded on only three occasions during the prior recession in 2001, immediately after the September 11th attacks.

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simplesimon said...

"How long this recent trend lasts is anyone's guess"

As far as the government figures go, I'll go ahead and hazard a guess that the figures will be manipulated to show improvement as much as possible.

As far as REALITY goes, I'll guess that unemployment will not get better for a VERY long time.

We have a fundamental problem: our economy is largely built on debt-enabled personal consumption. Everything the government is doing is based on getting back to that model as quickly as possible.

We may have finally hit the point where that will simply not be possible. Until recently, our country's debt has been accepted on the premise that we can re-pay it and it's backed by our vast military might.

If our foreign creditors decide we can't pay it and may not be able or willing to blast them all to oblivion, they will cut us off.

Even if they don't completely shut us down, there's no realistic or sustainable way we can get back to the level of consumption we were at when Greenspan's real estate bubble burst.

This means that our economy will contract (either slowly for a long time or rapidly to a very bad level) going forward. "Reversion to the mean" requires this result.

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