Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
How is the Economy Doing? The Weekly Unemployment Insurance Claims Say "Not So Good"
In the week ending July 5, the advance number of actual initial claims for unemployment insurance, totaled 322,248, an increase of 16,542 (or +5.4 percent) from the previous week. The figure the media reported was for seasonally adjusted initial claims, 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000. The seasonal factors had expected an increase of 28,394 (or + 9.3 percent) from the previous week. We do not know what seasonal factors could produce the expectation of a 9.3 percent increase in a single week with the exception of seasonal factors such as annual layoffs in the auto industry perhaps. They did not occur. The actual number of claims filed is a more reliable figure than the seasonally adjusted figure as we have long argued on this blog. The BLS should report the actual number of claims filed and then append what seasonal factors may be affecting the number of claims.
After several weeks of actual claims falling below 300,000, which indicated a strengthening economy, it is unnerving to see such a substantial increase in unemployment insurance claims. I viewed the numbers below 300,000 as very promising but we need several weeks of claims data to determine where the economy is heading. The interruption of the downward trend must give us pause especially when coupled with the dismal decline in Gross National Product of 2.9 percent in the first quarter of 2014. The trade deficit in May amounted to $44 billion, equivalent to about 360 to 440 thousand jobs.
As we have argued, Fed policy during the past five years was supporting an increase in asset prices of stock market securities and real estate but did little to promote employment. Federal fiscal policies, particularly Obamacare, environmental excesses, the trade deficits, the increase in the number of families receiving government subsidies, etc. have been a drag on employment in manufacturing. And as we reported on this blog a few weeks ago, the federal and state minimum wages were preventing the employment of teen-agers and the sunskilled. Moreover, according to the BLS, nearly half of those employed are employed part-time. This is one of results of Obamacare. Employers do not have to provide health insurance to those employees working less than 30 hours per week.
We see no end to the policies that are causing economic stagnation. We believe the outlook for the economy is for continued stagnation or worse, another recession.
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