On Unemployment Claims: Can thought be controlled by repeating positive messages while underreporting negative, and vice versa?

Watch The Distortions (UIC Data)

 

The unemployment claim release looked good.  Here's the headline:

 

In the week ending Oct. 31, the advance figure for seasonally adjusted initial claims was 512,000, a decrease of 20,000 from the previous week's revised figure of 532,000.

 

…The advance number for seasonally adjusted insured unemployment during the week ending Oct. 24 was 5,749,000, a decrease of 68,000 from the preceding week's revised level of 5,817,000.

 

Now let's talk truth:

 

The advance number of actual initial claims under state programs, unadjusted, totaled 480,178 in the week ending Oct. 31, a decrease of 14,216 from the previous week. There were 466,341 initial claims in the comparable week in 2008.

 

The rate of firing is higher than it was this week last year - a really, really bad time…

 

So why the disconnect?

 

States reported 3,459,148 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Oct. 17, an increase of 90,239 from the prior week.

 

68,000 people came off the rolls and found jobs, right?

 

Wrong.

 

90,239 fell off the government's "official statistics" and rolled into "extended programs."  That means that net-on-net the picture got worse by 22,239.

 

It gets even better than this, however, as we are now far enough into the mess that people are rolling off even the extended benefit programs in many states!  There is no current tabulation of that count, but any number greater than zero simply adds to the malaise.

 

The bottom line: Unemployment continues to get worse, not better.

 

Karl Denninger

The Market Ticker, November 5, 2009