Are jobless claims peaking?

[jiimbergin]

http://www.nakedcapitalism.com/2009/...s-peaking.html
Year over Year changes in NSA initial claim avererages appear to have peaked?

Quote:
Here are the dates and numbers for peaks in changes in initial claims going back to 1967 when the data began:

1. 5 December 1970 at 120,000 (the recession ended in November 1970)
   
2. 1 Feb 1975 at 361,000 (the recession ended in March 1975. Note: Apr-Jun 1974 showed positive GDP growth)
   
3. 7 Jun 1980 at 238,000 (the recession ended in July 1980. Note: this was the first in a double dip recession)
   
4. 30 Jan 1982 at 202,000 (the recession ended in November 1982. Note: Apr-Jun 1982 showed positive GDP growth)
   
5. 23 Mar 1991 at 154,000 (the recession ended in March 1991)
   
6. 20 Oct 2001 at 165,000 (the recession ended in November 2001)
   

I hope this makes it pretty clear that the last few recessions show changes in initial jobless claims as a coincident or leading indicator. Moreover, the peak in this cycle right now stands at 327,000 on 31 Jan 2009, which was 2 months ago. Today, we are at 275,000, quite a bit lower. Now, unless the SA weekly initial jobless clams start hitting 700,000 - 800,000 this spring and summer, we have already seen the peak here.

I should also point out that changes in the unemployment rate and initial jobless claims are also not the lagging indicators that the unemployment rate itself should be considered.

[flintlock]

Re: Are jobless claims peaking?

Are you saying you think the recession will be over in the next few months because the increase in jobless claims went down a bit ? I seriously doubt that. Hard to compare previous statistics with what we are going through now. Trillions in government bailouts kind of throws all the old rules out the window don't you think? More " lies, damned lies, and statistics".

[Diarmuid]

Re: Are jobless claims peaking?

removed comment - misread peaks in changes in initial claims

[jiimbergin]

Re: Are jobless claims peaking?

Are you saying you think the recession will be over in the next few months because the increase in jobless claims went down a bit ? I seriously doubt that. Hard to compare previous statistics with what we are going through now. Trillions in government bailouts kind of throws all the old rules out the window don't you think? More " lies, damned lies, and statistics".

No, I do not think the depression is close to ending, but it does appear that initial claims have, at least temporarily,peaked.

[flintlock]

Re: Are jobless claims peaking?

No, I do not think the depression is close to ending, but it does appear that initial claims have, at least temporarily,peaked.

So what conclusion do you draw from that information? That the recession has peaked? Frankly, I just think the rules have all changed and there is very little value in looking to past stats in order to predict the future. We are going through a fundamental change in our economy, and lot of people still can't get their minds wrapped around that fact. ( not saying you feel that way)

Example:

I own an electrical contracting company that does mostly residential service work and upgrades. A regular customer called today with a pretty big list of improvements she wanted done on her nice but fairly modest home. New Kitchen, new master bath, (granite countertops of course), $1800 chandelier installed, all the bells and whistles in other words. I jokingly asked if she had won the lottery or something. She said they decided to "invest" in their house since the stock market was doing so bad and that they would get 100% of their investment back on resale.:eek: Old habits die hard. :rolleyes:

[jiimbergin]

Re: Are jobless claims peaking?

So what conclusion do you draw from that information? That the recession has peaked? Frankly, I just think the rules have all changed and there is very little value in looking to past stats in order to predict the future. We are going through a fundamental change in our economy, and lot of people still can't get their minds wrapped around that fact. ( not saying you feel that way)

Example:

I own an electrical contracting company that does mostly residential service work and upgrades. A regular customer called today with a pretty big list of improvements she wanted done on her nice but fairly modest home. New Kitchen, new master bath, (granite countertops of course), $1800 chandelier installed, all the bells and whistles in other words. I jokingly asked if she had won the lottery or something. She said they decided to "invest" in their house since the stock market was doing so bad and that they would get 100% of their investment back on resale.:eek: Old habits die hard. :rolleyes:

I agree that this is differrent than previous periods, but I don't think we can write off all previous comparisons. This depression will end someday (and I do not think it will be soon) and we want to be ahead of the curve when it does. So comparing now to previous periods using all sorts of data is, IMHO, necessary but not sufficient.


Your example is probably happening all over the country. Old habits do indeed die hard. For example, it is hard for me not to buy shares in companies that look really good based on fundamentals, but I have controlled myself so far, except in a few cases.

[raja]

Re: Are jobless claims peaking?

I jokingly asked if she had won the lottery or something. She said they decided to "invest" in their house since the stock market was doing so bad and that they would get 100% of their investment back on resale.:eek: Old habits die hard. :rolleyes:

If you're expecting your house to go down 40%, but you're also expecting 100% inflation (or hyperinflation :eek, and all the items you're upgrading your house with will also go up 100%, I think investing in one's house is a good idea . . . assuming you don't have to sell it for awhile.

[goadam1]

Re: Are jobless claims peaking?

And the cycle begins again.

[flintlock]

Re: Are jobless claims peaking?

If you're expecting your house to go down 40%, but you're also expecting 100% inflation (or hyperinflation :eek, and all the items you're upgrading your house with will also go up 100%, I think investing in one's house is a good idea . . . assuming you don't have to sell it for awhile.

Yes, if the home "needed" work, it certainly could be wiser to spend now vs later. Only none of that crap has much at all to do with anything adding real value. If it needed repairs or updating sure, but the house is fine as is and doesn't really need any work. Its a cookie cutter neighborhood where the price won't vary 10% regardless what she puts in it. It's overkill for the neighborhood most certainly. So any value will be in terms of personal satisfaction, not monetary. I was just chuckling at how people rationalize things in order to get what they want. Its exactly what happened across American with the housing bubble. People rationalized financially unwise home improvements by saying it will add value. That's the same old FIRE economy BS that was spewing from Real Estate agents mouths all across America.

[flintlock]

Re: Are jobless claims peaking?

I agree that this is differrent than previous periods, but I don't think we can write off all previous comparisons. This depression will end someday (and I do not think it will be soon) and we want to be ahead of the curve when it does. So comparing now to previous periods using all sorts of data is, IMHO, necessary but not sufficient.


Your example is probably happening all over the country. Old habits do indeed die hard. For example, it is hard for me not to buy shares in companies that look really good based on fundamentals, but I have controlled myself so far, except in a few cases.

I don't mean literally throw out all old data, but that it will become less relevant.

I was listening to a consumer show on the radio today. The host was going on about all the bargains in the stock market and how he was buying up foreclosed homes. Talk about here we go again! Now the host is a multi-millionaire. He'll do fine. But he had all these people calling in talking about cashing in their IRA to fund the downpayment on an investment home.

[Guest]

Re: Are jobless claims peaking?

Raja - I've done several major remodels and I'm suggesting to you that "investing in your house" is completely invalid as an "investment". This simply does not work (unless you are taking a dump of a place and bringing it up to modern amenities), and don't do it unless something really needs repair. I've seen massive improvements add very little appraised value to property, even in bull markets. In bear markets and their long drawn out aftermath, this money spent is indistinguishable from just going to any retail store and buying toys. You won't get that money back anywhere. If you are in a position to spend money improving your home, it is best to think of it strictly as discretionary spending one chooses merely to improve the quality of one's life. But it is a non-recuperable expense, for the greatest part.

[Sharky]

Re: Are jobless claims peaking?

Here are the dates and numbers for peaks in changes in initial claims going back to 1967 when the data began

So the author is looking at the average of a second derivative of a highly massaged number, after ignoring seasonal adjustments, and without taking into account statistical error or noise, and is then using that to infer a first derivative / trend?

What a bunch of crap. He should get a job with Lehman or maybe the Treasury; his analysis seems right up their alley.

[don]

Re: Are jobless claims peaking?

Raja - I've done several major remodels and I'm suggesting to you that "investing in your house" is completely invalid as an "investment". This simply does not work (unless you are taking a dump of a place and bringing it up to modern amenities), and don't do it unless something really needs repair. I've seen massive improvements add very little appraised value to property, even in bull markets. In bear markets and their long drawn out aftermath, this money spent is indistinguishable from just going to any retail store and buying toys. You won't get that money back anywhere. If you are in a position to spend money improving your home, it is best to think of it strictly as discretionary spending one chooses merely to improve the quality of one's life. But it is a non-recuperable expense, for the greatest part.

I read a study years ago that predated the bubble so it applied to 'normal' times and the kitchen was the best equity enhancer in the remodel game. Top returns peaked at 70-80% of the cost of the remodel so you only lost 20-30% of your investment plus all the headaches of the remodel. Brilliant :rolleyes:

[raja]

Re: Are jobless claims peaking?

I read a study years ago that predated the bubble so it applied to 'normal' times and the kitchen was the best equity enhancer in the remodel game. Top returns peaked at 70-80% of the cost of the remodel so you only lost 20-30% of your investment plus all the headaches of the remodel. Brilliant :rolleyes:

Lukester and don,

What you say is probably true . . . in a low-inflation world.

But keep in mind that "real" things will go up in value in big inflation. If your return on house upgrades was 70%, but that return also increased by 100% due to inflation, it could be profitable.

If you don't have a good inflation-hedged investment -- and so far I can't find a bullet-proof one -- better to put your $$ in real stuff than let it be eaten away by inflation.

[Rajiv]

Re: Are jobless claims peaking?

Only if your wages keep up with inflation! But that has not been the case for the last 40 or so years for 95% of the population -- see this thread starting from my post.

See also the work of Saez and of Dumhoff linked here