Ho Ho Humbug to your Labor Data Display

I said it last week and I reiterate it today. Ho ho humbug on Jobless Claims! Yet again, the popular press and mainstream business channels pumped the holiday cheer for weekly unemployment benefits. Still, what I suspect my colleagues missed, probably due to too much eggnog over lunch, was that it’s the week before Christmas… and all through the house, nobody is getting fired, except for maybe the mousy little receptionist.

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Ho Ho Humbug!

Weekly Jobless Claims for the week ending December 17 were reported down another 4,000 to 364K. That was off the prior week’s revised figure, which posted marked improvement. However, we noted last week that the holiday season likely played a role in the improvement despite seasonal adjustments. And we noted then, and reiterate now, that even if the labor market were improving, the economic outlook is poised to undermine it once again.

Perhaps because we’ve been scribbling longer than many of the grunts reporting on the subject on Thursday, or maybe just because we care if we’re right or wrong, we noted that this sentimental benefit related to the holiday season existed last year as well. If you’ll recall, the labor market still languished in 2011, and that was during a period of supposed economic growth.

That said, the four-week moving average of jobless claims improved by 8,000 through the period, to 380,250. Again though, the marked improvement from the prior week period combined with the continuation of lower claims levels this week, were the driver. There’s no long-term trend here yet, and I suggest traders wait until mid-January to start buying into a labor market inflection point. Otherwise, ye merry gentlemen may find all your gifts have been lifted by wiser men than ye.

The other great farce found in this regular report is the continuing claims data. This time covering the period ending December 10 (a week lagged), insured unemployment improved by a tenth of a percent to 2.8%. That accounted for 3,546,000 people and an improvement of 79K.

Still, the most unbelievable of the data is in the reported insured unemployment under all programs line, which includes the benefits extension program. According to the DOL, for the period ending December 3, the total number of people claiming benefits in all programs improved by 299,738 and now includes 7,149,769 Americans. This figure in particular has been fluctuating wildly over recent weeks and is highly suspect in my view. If there truly is a drop-off in the number fitting into this poor souls’ pool, I expect it is more likely due to their falling out of the workforce or overrunning their 99 weeks, rather than their finding jobs.

While I probably should feel a little sorry for raining on the holiday party, I in fact do enjoy playing the role of the Grinch here this year. So to all the little Whos in Whoville, I say your joy is unfounded! As a result, any investment flurry inspired by it is confounded! Ho ho humbug to your labor data display.

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