U.S. Initial Jobless InsuranceClaims Nudge Higher

By the smallest of margins, the job market deteriorated last week but the trend continued its recent improvement. The Labor Department reported that initial claims for jobless insurance ticked up 1,000 to open the New Year at 434,000. Claims stand at the lowest level since late in August, 2008 and were down from the recession peak of 674,000 hit last March. Consensus expectations has been for 440,000. The four-week moving average of initial claims also fell to a new cycle-low of 450,250.

Continuing claims for unemployment insurance during the latest week again fell sharply. The 179,000 drop was part of a nearly one-third decline since late-June. Continuing claims were at the lowest level since January of last year. The overall decline is a function of the improved job market but also reflects the exhaustion of 26 weeks of unemployment benefits. Continuing claims provide an indication of workers' ability to find employment. The four-week average of continuing claims fell to 5,005,750. This series dates back to 1966.

Extended benefits for unemployment insurance dropped sharply to 296,534 during the third week of December. The latest was down by one-half  from the peak reached during November of 597,688.

The insured rate of unemployment also fell to a new low of 3.6%. The rate reached a high of 5.2% during late-June. During the last ten years, there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.

The highest insured unemployment rates in the week ending December 19 were in Alaska (6.7 percent), Oregon (5.9), Puerto Rico (5.8), Nevada (5.6), Idaho (5.5), Pennsylvania (5.2), Wisconsin (5.2), Montana (5.1), Washington (5.1), and Michigan (5.0). The lowest insured unemployment rates were in Virginia (2.0), North Dakota (2.2%), Texas (2.4), Florida (3.1), Wyoming (3.3), Maryland (3.4), Ohio (3.4), Maine (3.5), New York (3.6) and Mississippi (3.7). These data are not seasonally adjusted but the overall insured unemployment rate is.

The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database.

The minutes to the latest meeting of the Federal Open Market Committee can be found here. 

While governments around the world have taken strides to pump up expenditures to keep economies going the consumer, largely, is still not on board, at least not in Europe.

Total Euro-Area consumer spending is down by 0.3% in November after being down in earlier months…seventeen down months in a row in fact. Over three months the pace of contraction in Euro-consumer spending remains about the same as over six months and only a bit less than over 12-months.

Even motor vehicle registrations that had bumped up on special government assistance plans across the various Zone countries fell in off in November. German retailers continue to be hard-hit and to look for a return of the consumer there.

Overnight Australia reported a 1.4% kick to November sales, one of the few places besides the US where the consumer seems to be aware that he has a wallet in his pocket or a purse over the shoulder.

Sustained recovery will require a return of the consumer. Even in Europe the consumer is large proportion of GDP. Right now Europe continues to benefit from export led growth; China pushes export led growth; Japan pushes export-led growth. But for all that to work, the European consumer, and Japanese consumer will have join in. The consumer in the US appears to be back in gear but there is not enough there to feed the global economy with US retail demand. The world economy needs balance. Other countries must get their consumers in gear because ‘everyone wants’ to sell to the US but ‘everyone also wants’ the US trade deficit to shrink and these two ‘everyone wants’ are in deep conflict with each other. So if ‘anyone wants’ logic and consistency something will have to change.