Friday, June 19, 2009

UPDATED: Citi: Because So Few People Remain Unemployed For The Full 26 Weeks

I was reading the commentary on U.S. weekly jobless data by Citigroup (Global Markets) economists last night. Quite interesting arguments, indeed (my emphasis):
Weekly jobless claims rose mildly for the week of June 13th, but the four-week average continued to decline gradually. Continuing claims for the week of the 6th fell by 148 thousand, which was the largest one-week decline since 2001. Some market participants have claimed that this drop was caused by people's benefits expiring. While we would agree that some workers are falling off the rolls, this effect is far too small to account for the latest drop in continuing claims because so few people remain unemployed for the full 26 weeks. Swings in beneficiary rolls are mainly driven by the balance between the influx of new claimants and the outflow of people who find jobs. This difference can be quite volatile so it is unwise to make too much of a single week change. If continuing claims continue to fall, we would take it as a sign that the labor market was improving.
So, you know now! Excellent explanation? Why continuing claims decreased?

Well, obviously I have to bring more clarifications ... Citi' s argument in itself (my emphasis in bold) is a non-sense without hard data ....

David Rosenberg, the chief economist and strategist at Gluskin Sheff, brought "the big picture" to the stage much better today:
All of a sudden, we have an army of economists now looking at the continuing claims data as confirmation that the green shoots are turning green again and that the pace of firing is subsiding. That may well be the case, but it is also the case that seasonal adjustment around the Memorial Holiday was at play, or the prospect that the massive 2.6 million people getting extended or emergency benefits may be rolling off. Either way, let’s not lose the big picture, here; claims have now been north of 600k for 20 weeks in a row, which is without precedent.

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