It's a reasonable point, but it seems that there's always a new
reason to dismiss the fall in claims. The reality is that new filings
for jobless benefits have been trending lower for well over a year. It
could be all over next week, but it's premature to say that the jig is
up, even in the wake of one of the worst hurricanes in decades.
"When you see bad weather, there's usually a drop in claims, and then you typically see a rebound in the next few weeks," observes
Scott Brown, chief economist at Raymond James & Associates.
"Underneath the surface, job destruction has been trending very low.
Layoffs aren't the problem -- it's the relatively weak pace of job
That's a fair point as well, and probably closer to the truth. But
the potential for Sandy-related blowback can't be ruled out. "You'll
undoubtedly get a spike in unemployment claims that has not hit yet; it
did not hit in the numbers ... because everybody was still in the midst
of the aftermath of the storm, but, you know, expect the next several
weeks to show a significant spike," predicts Liz Ann Sonders, Charles Schwab's chief investment strategist.
Perhaps, but no matter what next week's report says, let's not read
too much into one data point, especially the seasonally adjusted one. A
better way to look at the data is to compare the unadjusted numbers on a
year-over-year basis, and through time. By that standard it's not
obvious that the modest pace of decline has run its course. New filings
are still falling at roughly 10% a year before seasonal adjustment. Last
week's nearly 12% year-over-year drop may be an anomaly; if it is,
we'll see the payback in the weeks ahead. But then comes the question of
whether the declining trend will resume. No doubt there'll be another
distorting factor to consider by then.
Meantime, let's not forget that payrolls data for October perked up a bit, and the manufacturing and services
sectors (via the surveys published by the Institute for Supply
Management) imply that there's a decent amount of momentum in the
Is it all a head fake? Never say never, but Rome wasn't built in a
day and periods of economic growth—even relatively weak recoveries—don't
evaporate while you step out for coffee. Let's see what next week's
reports tell us, including the October updates on retail sales
(Wednesday, Nov 14) and industrial production (Friday, Nov 16).
Meantime, there are plenty of talking points to go around. The good
news is that the same can be said for mildly encouraging economic
data--assuming we can believe it.