Unemployment

Posted by Ray on July 30, 2009 under Economy, Main | Be the First to Comment

There was an increase of new claims which was above expectations, but the decline in continuing claims is the driver of today’s rally. Here is the way I see it, if people fall off the unemployment rolls they do not count any longer. Considering we are seeing the beginning of a “decrease” in ongoing claims we need to look deeper into the numbers.

Between regular unemployment claims and emergency unemployment claims a person can remain on the rolls for a long time, but not indefinitely. We are seeing the beginning of people completely falling off the unemployment rolls, not because they have a job ut simply because they exhausted their benefits. Emergency claims are on the rise as illustrated in the data, but not talked about in the media.

In the report they said; “States reported 2,656,879 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending July 11, an increase of 24,518 from the prior week. There were 127,438 claimants in the comparable week in 2008. EUC weekly claims include both first and second tier activity.” This is less then encouraging, but what do I know.

Enjoy the rally and the temporarily good, in the eyes of some people, economic data and the overbought rally. Frankly, I believe we are headed for a spectacular down draft in the markets as the data does not support such a rally. Not to mention, 500K a week in new claims, consistently, in a major problem.