Job Seekers Believe in Santa Claus

The last few weeks’ jobless claims data almost had me believing in Santa Claus. The weekly applications for unemployment insurance, filed by those who have recently lost their jobs, have trailed off. It’s enough to lead an economist to recalculate, and certainly enough info to give a savvy market strategist something positive to say to disgruntled investors. But, sadly, it’s all just another fairytale – there is no Santa Claus! Sorry to bust the beginning of your bubble...

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Believers in Santa Claus

Weekly unemployment claims for the week ending December 3, 2011, declined 23,000; that’s a lot. But take note dear dreamers, as the claims count was off from a revised prior week figure of 404K. Thus, last week’s count that we all also celebrated for its positive trend, was actually up from the prior week’s 396K measurement. The four-week moving average is still short of 400K, sitting now at 393,250, but it’s close enough to be wary, especially given seasonal influences that might not be properly adjusted for these days.

What I just wrote is controversial because the numbers are seasonally adjusted. However, I argue that due to the dynamic current environment and the degree of unemployment and the state of labor, the seasonal adjustment might not be adequately accounting for what may be a larger percentage of unemployed workers suddenly finding employment in the retail sector than is usual over the historical record. Historical adjustments are not usually dynamic; they’re based on the historical trend which smoothes over the spikes and troughs. That’s fine, but where they can go wrong is when they do not account for changes and situations that do not match the historical record, like today’s unusual environment. Without getting too algorithmic on you, I think I’ve made my point without your needing an aspirin as a result.

The Employment Situation Report for November, published last week, showed that the retail sector added 50,000 new employees on net through the month. I suggest that due to the dynamic environment, retailers were likely running on short staff longer into the start of the holiday shopping season, and have hired in bunches of late. Management of inventory is not the only efficiency gained by technological innovation. Indeed, process improvements stretch to workforce control. Now these points made here are something you’ve not likely read anywhere else, but will read time and again in the future. Please take note when you hear financial gurus quote me on the radio and TV, and complain when “The Greek” gets no credit. It’s happened time and again, but it’s not the fame I want, but the following I deserve for ideas like these. Continuing with the thought, some of the folks who might have applied for unemployment benefits probably passed “Now Hiring” signs on their way there and bypassed the heartache.

Looking at the claims report details, we find the Tooth Fairy isn’t real either. The insured unemployment rate improved by two-tenths of a percentage point, to 2.8%, in the week ending November 26 (reported period). However, those of us who inspect the monthly Employment Situation data know that there have been conspicuous deductions to the workforce. In months and years past, we’ve offered some likely reasons for this trend, including depression and despair.

The unemployment pool is so large and so full of long-term jobless Joes that there’s likely an effect created to this data. As we all know, the holidays can be depressing, especially if you’re not employed. Despair can set in, and while the checks are critical to those receiving them, meeting the requirements of the Department of Labor or the Welfare Department can get tiresome for the tortured among us. Now, in case you were not aware due to a lack of a driver’s license (DMV reference for the slow), government employees aren’t always the most compassionate of people, nor efficient. Thus it’s easy to screw up within the convoluted process of collecting government aid. The workforce count cut we’ve seen recently could be due to this effect. We’ve noted it here before in years past and around this time of year as well.

The total number of Americans claiming benefits of some sort, thus including the unemployment extension program, dropped by an astounding 431,307 in the period ending November 19 (reported today). Look, it may be the anniversary of John Lennon’s passing, and while I am a dreamer, I’m still not a believer in these numbers. You can go ahead and categorize labor data with the story of Santa Claus and the Tooth Fairy. I’m a believer no more.

However, I am a fan of this Saint Nicholas.

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.PK), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

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