Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Misleading Jobless Claims Economic Data and Recessions

Economics / Market Manipulation May 06, 2009 - 04:56 PM GMT

By: Tim_Iacono

Economics

Best Financial Markets Analysis ArticleOne of the many "green shoots" that has popped up recently for the U.S. economy is the possible peaking of weekly jobless claims, what has been increasingly referred to as a "reliable" indicator for the end of recessions since 1967 when this data was first collected. The chart below, similar to the one published by CR in this item from a couple weeks ago shows the correlation.


That certainly looks promising.

With the four week moving average having dropped from almost 660,000 per week in early-April to just under 640,000 per week in last week's report, many now think that everything is falling into place for a speedy conclusion to this recession.

The stock market certainly thinks the recession is over...

This item at Voxeu by Robert J. Gordon, an economist at Northwestern who also happens to be a member of the National Bureau of Economic Research committee (i.e., the group responsible for determining the official start and end of recessions), provides an update on this relationship, going so far as to examine "false peaks" before concluding that "it is highly probable that the new claims peak has now occurred".

Naturally, that would mean that the recession, if not already over, will soon be over.

Looking at the chart above, it all makes sense - you'd think that we've reached a peak similar to that seen in previous recessions, just shy of the 1982 mark of 670,000, and that things are sure to improve from here on out.

But, that may not be the case because that chart is very misleading.

And, interestingly, it is misleading for reasons that were touched on very briefly in the Voxeu piece, but not examined further before arriving at the optimistic conclusion that the end of the recession is nigh.

How is it misleading?

The data is not adjusted for the size of the workforce.

When making that adjustment, the menacing blue line at the 2009 mark in the chart above transforms into the red line below, something that, all of a sudden, looks quite tame when compared to the same red line back during the recessions of the 1970s and 1980s.

Now, granted, the composition of the workforce has changed quite a bit over the last 30 years and we may never reach the population-adjusted peaks that were seen back then, but surely we have to come a bit closer to those peaks now that the great credit and debt orgy of the late-20th century has come to its painful conclusion.

For example, to reach the 674,000 October 1982 peak for new unemployment insurance claims, we'd have to see a figure of over a million today. To equal the February 1975 peak of 561,000 would require over 1.1 million.

That's almost double the recent peak!

Having blown past comparisons to the 1991 and 2001 recessions for virtually every other economic statistic months ago, it could be that whether jobless claims reached a peak last month isn't the most important question out there today.

Perhaps the most important questions to ask are how close we'll get to the population-adjusted highs of the 1970s and 1980s and how long it might take to get there.

By Tim Iacono
Email : mailto:tim@iaconoresearch.com
http://www.iaconoresearch.com
http://themessthatgreenspanmade.blogspot.com/

Tim Iacano is an engineer by profession, with a keen understanding of human nature, his study of economics and financial markets began in earnest in the late 1990s - this is where it has led. he is self taught and self sufficient - analyst, writer, webmaster, marketer, bill-collector, and bill-payer. This is intended to be a long-term operation where the only items that will ever be offered for sale to the public are subscriptions to his service and books that he plans to write in the years ahead.

Copyright © 2009 Iacono Research, LLC - All Rights Reserved

Tim Iacono Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in