John Hussman’s view of the economy is dead on, because he sticks to the facts. The negative 4th quarter GDP announced yesterday confirmed his assessment that the economy went into recession in the 2nd half of 2012. His letter this week addressed the bullshit unemployment claim numbers that have been seasonally adjusted to make it seem like we have a jobs recovery. He predicted this would reverse itself shortly. This morning’s horrific numbers confirmed his analysis. It’s amazing how right you are when you use facts.
“On the economic front, the recent decline in new unemployment claims seems to have added a great deal of steam to the bullish case. But as I noted last week, much of that effect is actually tied to the very heavy downward seasonal adjustment that accompanies initial claims data in January. Beginning this week, and continuing through about mid-March, the seasonal adjustment factors will “think” that they have already corrected for that post-holiday bulge in new claims. Given that we did not see that bulge (particularly the second week of January) and that the jobs typically end up coming off anyway when the bulge doesn’t emerge on schedule, the figures from now until mid-March are actually the ones to watch.” – John Hussman 1-27-13
New U.S. jobless claims jump 38,000 to 368,000
WASHINGTON (MarketWatch) – The number of people who filed new applications for U.S. unemployment benefits climbed 38,000 to a seasonally adjusted 368,000 in the week ended Jan. 26, putting them at a one-month high, according to Labor Department data released Thursday. Economists surveyed by MarketWatch expected claims to climb to 355,000. Initial claims have returned to a level that prevailed through the later stages of 2012 after touching a five-year low earlier this month. Claims are often extremely jumpy in January after the end of the holidays and the start of a new year. Companies let go of temporary hires and some people wait until after the holidays to file claims. Initial claims from two weeks ago were unrevised at 330,000. The average of new claims over the past month, meanwhile, edged up by 250 to 352,000. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends. Also, Labor said continuing claims increased by 22,000 to a seasonally adjusted 3.2 million in the week ended Jan. 19. Continuing claims reflect the number of people already receiving benefits. About 5.9 million people received some kind of state or federal benefit in the week ended Jan. 12, up 255,501 from the prior week. Total claims are reported with a two-week lag.