Thursday, September 10, 2009
Jobs Data: Weekly Claims
Weekly jobless claims came in a bit better than expectations at 550,000 (initial claims). Continuing claims are still hovering over 6 million, I have noted in past posts that interpreting this number is becoming more difficult because of the expiration of benefits.
We now have 3 of the 4 weeks in for modeling the September non-farm payroll report. The survey period ends on the 12th of each month, so the last 3 weeks of initial claims correspond to that time frame. The average initial claims for the last 3 weeks is 568,000: according to my model, this points to a drop of about 250,000 in non-farm payrolls.
This is a major problem. I know, job losses have slowed. However, could somebody please explain to me where people are going to get money to pay for stuff:
- Home prices are down roughly 18% from last year: no mortgage equity withdrawal
- Unemployment is creeping up on 10%: no jobs & wage pressure crimp income
- Expiration of unemployment insurance: no more weekly help form the government
- Consumer credit is falling: can't roll over debts any longer or borrow additional funds
- Negative wealth effect: equities have rallied since March, but are still below 2008 levels.