Never mind: actually unemployment wasn’t on the rise last week
Remember last week when everybody was in a dither about an unexpected increase in the number of workers filing an initial claim for unemployment? Suddenly the economic recovery in the United States looked in doubt.
Well, never mind. Today’s initial claims number, for the week that ended on February 6, dropped by 43,000 to 440,000. Economists had been expecting a decline to 465,000.
The week-to-week volatility in this number is a good reminder of, well, the week-to-week volatility in this number.
Last week’s increase in initial claims to 483,000 was such a shock because it argued that after dropping to 444,000 for the week that ended January 9 an improving employment picture had gone into reverse.
As initial claims marched upward in January—rising to 479,000 for the week of January 16, for example—some economists had urged a wait-and-see attitude to the numbers. Processing lags over the Christmas holiday, they noted, always did strange things to the numbers at the end of the year. But the surge in the numbers reported last week—so long after Christmas—raised doubts about that argument.
Well, it turns out, the Department of Labor now says, that a backlog of claims had built up over the Christmas holiday and that it took until last week to work through the paperwork pileup.
So the deterioration in the initial claims numbers in January and the sudden improvement this week are really just statistical reflections of lags in processing. And the numbers should start showing the real trend again, whatever it is, as we move deeper in February.
One thing to watch out for, a post this morning on Briefing.com reminded me, is that at this stage of the typical economic recovery big companies, which tend to be more aggressive in cutting workers and restructuring their work force in a recession, have largely finished their job cuts. They may even be starting to add workers. Last week, for example, Cisco Systems (CSCO) announced that it would add 3,000 jobs.
Smaller companies, on the other hand, tend to be slow to cut jobs in a recession out of loyalty to the members of a smaller work force or just out of a belief that the company can get through the hard times without doing anything drastic. So at this point in a recession, Briefing.com notes, a higher percentage of the newly unemployed come from smaller companies. The economy as a whole may be improving but Main Street will still be feeling the pain.
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Jim,
The next BIG market-moving story is on the way, and I predict we will see it by Monday (possibly as early as today). While I suspect it will involve Israel and/or Iran, and have a significant impact on the oil market, a failure in the Greek bailout talks could have a market-moving effect too (although I think Israel/Iran is a greater probability scenario).
I suspect the markets will disregard the unemployment news for now, specifically because it is NOT good enough.
Ed, so what do you think is going to happen to oil/stocks? Looks like the big oil company’s are down just a touch this morning.
At this point, the exact event is speculative. Here is what we know:
http://www.rightsidenews.com/201002108618/editorial/israeli-warships-en-route-to-the-persian-gulf.html
1. Israelis warships have moved into the Red Sea, and MAY be headed for the Persian Gulf.
2. It is unclear EXACTLY what Iran has produced as far as uranium. I have heard both weapons grade and non-weapons grade. Regardless, Israel will not take chances, especially based on Ahmadinejad’s repeated threats against Israel in the past. If you need historical context, just consider what Israel did decades ago when it looked like Iraq (under Saddam Hussein) was trying to build a nuclear power plant.
3. The protests currently happening in Iran may give the Israelis cover for an attack. Conversely, the Israelis might wait to see if the Iranian government comes under a more significant attack (i.e. civil war) before deciding to do anything militarily.
Needless to say, IF there is either an Israeli attack, or a civil war in Iran, the oil markets will over-respond, sending crude oil and natural gas prices shooting up (Iran has the second largest reserves of both).
Thanks for the update. Are you going to short oil then?
Long oil! The price of oil would shoot up on ANY news of a potential Middle East war.
tater:
Short oil? Someone must have balls the size of basketballs.
E
Israel cannot successfully attack Iran without approval from the US. They do not have enough conventional weapons to do so. Iran’s nuclear program much more developed than Iraq’s was and is spread out over the country. A token attack on one facility would not make sense because it would be viewed as a weak response and failure. The US is likely resigned to the fact that Iran will inevitably have nukes. Lately, Obama has been talking up the defensive measures in the region. Upgraded patriot missiles and the like. Israel does have a final option but nobody wants to talk about that. Regardless, any attack would send oil higher.
It kind of reminds me of the “fat lady” syndrome. Poor thing knows she’s gonna sing…just don’t know which aria in which opera…and when.
Traders & investors certainly have sold the news in this earnings quarter. It has been JOBS, JOBS, JOBS…now, GREECE, GREECE, GREECE. Maybe they need the cacophony of 2 or more operas going at the same time, you know, half of the orchestra plays one opera, the other half the other one! Let the fat lady choose which one she wants to sing!
The market has made just about as much sense considering your statement about “The week-to-week volatility in this number is a good reminder of, well, the week-to-week volatility in this number.” The drama continues.
drevil,
Exactly WHAT would the U.S. do if Israel attacked Iran without permission? Move our troops from Afghanistan into Israel? Considering it took Obama months to decide what to do in Afghanistan, I doubt any action would come quickly from him.
But let’s assume you’re right. Do you honestly think the U.S. and Israel would advertise the fact they came to an agreement to allow Israel to attack Iran? Doubtful.
As for the number of Israeli conventional weapons, does anyone know how many would be required to knock out all of Iran’s nuclear facilities?
bobisgreen…
I found your post soooo amusing with the humor!! Great to be able to laugh despite the “doom and gloom” picture of late.
EdMcGon…
Thanks for the tip yesterday on AOD! I liked what I read!!
What do we really need? Get involved in another war. I mean the other 2 are basically running themselves and costing us nothing.
I would suspect Israel would try to covertly help the opposition in Iran to try and topple the Theocracy. Step #1: Set up a huge WiFi connection. Just my $.02
drevil,
One other thing to consider: Israel has no choices with Iran. Letting Iran build a nuke is out of the question, since Israel can be sure they’d be on the receiving end of it. Even a major war with Iran would be preferable.
Other options? None. China won’t let the UN approve sanctions against Iran.
Israel is backed into a corner.
STL,
No problem. Glad you liked it!
Run26.2,
Intriguing idea, but even the Iranian resistance wouldn’t accept help from Israel.
EdMcGon,
Iran has multiple nuclear facilities buried deep and spread throughout Iran and close to highly populated areas including Tehran. Only the US has a chance of taking these out with conventional weapons via airstrikes. And that is not a guarantee that it will be a success because of the accuracy or lack thereof of intelligence. Israel could take care of this with their nuclear arsenal. That would make them real popular with their neighbors.
Israel does not need the US as much as they did during the Cold War so they could go it alone but it would be suicide for them. The US announced it is providing ballistic missile defense to 4 countries in the Arabian Peninsula. They are also reinforcing existing Saudi defenses of oil terminals and other key targets. This is because the US (Obama) has no interest of getting into another conflict and that Iran will eventually have nukes. The defense built up around Iran, and announcing it is to deter any attacks by Iran and to keep a nervous Israel from going premptive.
Oil would still go up, to keep this slightly on topic.
the bigger question is how is the 4 week moving average trending?
drevil,
Here are the big questions: Does Israel know where Iran’s nuclear facilities are? And do they have the conventional capability of knocking them out? If it’s impossible to knock out the facilities using conventional means, would Israel preemptively use nukes?
I think only the Israelis know the answer to these questions, and they aren’t talking. But if they ARE moving ships into the Persian Gulf, I’d say the answer to the first two questions would have to be “yes”. Israel wouldn’t slyly move warships into the Persian Gulf if they were trying to bluff Iran.
terryw,
Excellent question!
I’ll tell that to my wife, a pharmacist, who along with others in the district for a chain retailer were let go this week. If this retailer was put in the spot to cut back hours, when their store was exceeding sales targets, I’m concerened for this “recovery”.
“These reports combined with Iran’s recent promise to strike the west with a “stunning blow” on February 11th, would lead one to conclude the stage is being set for a “counter strike” should Iran go through with it’s threat.”
Uh huh…
All the news that’s printed to fit.
Have fun with your theories and keep the alka seltzer handy.