May 5, 2011

Unemployment Claims: Economy in Freefall? It Surely Isn’t in ‘Rebound’ Mode (Update: So Let’s Look at a Mileage Tax!)

Filed under: Economy,Taxes & Government — Tom @ 9:20 am

Last week, my reaction was “Holy Crap!”

This week, O…M…G:

In the week ending April 30, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 43,000 from the previous week’s revised figure of 431,000. The 4-week moving average was 431,250, an increase of 22,250 from the previous week’s revised average of 409,000.

… The advance number of actual initial claims under state programs, unadjusted, totaled 412,873 in the week ending April 30, an increase of 25,006 from the previous week. There were 399,350 initial claims in the comparable week in 2010.

Here’s what the last nine weeks look like:

UnempClaims043011

(Mini-update: The expectations were that initial claims would drop to 400,000. Ouch.)

For what has to be the first time in at least a year, not seasonally adjusted claims in the past week were higher than the same week of the previous year:

UnempClaimsRaw043011

This is just brutal.

Here’s the link to the historical lookback tool, which I review to verify that prior weeks are what they were before. It’s usually in the press release, but it’s not there today.

Rebound? What Rebound?

___________________________________

UPDATE 1: So let’s look at imposing a privacy-invading mileage tax, and see how many more people we can throw into unemployment –

Obama floats plan to tax cars by the mile

The Obama administration has floated a transportation authorization bill that would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive.

The plan is a part of the administration’s “Transportation Opportunities Act,” an undated draft of which was obtained this week by Transportation Weekly.

This follows a March Congressional Budget Office report that supported the idea of taxing drivers based on miles driven.

Among other things, CBO suggested that a vehicle miles traveled (VMT) tax could be tracked by installing electronic equipment on each car to determine how many miles were driven; payment could take place electronically at filling stations.

There you go. This will create lots of new jobs retrofitting every gas pump in America so that it throws on a surcharge even before you start refilling. Brilliant.

UPDATE 1A: The administration is claiming it is an “early working draft proposal,” and “not a proposal supported by the administration.”

UPDATE 2: More from yours truly here.

UPDATE 3, 9:30 p.m.: Zero Hedge writes that the miss vs. the consensus estimate is the second-biggest ever.

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8 Comments

  1. [...] The butt-ugly news, part 1 (from Tom Blumer), is that for the 8th consecutive week, the prior week’s numbers were revised upward. This time, it was from the aforementioned 429,000 to 431,000. I’ll sttate right now that the trend will, indeed, continue next week. [...]

    Pingback by No Runny Eggs » Blog Archive » Initial unemployment claims spiked to 474,000 last week — May 5, 2011 @ 9:40 am

  2. So Tom, it the uptick in unemployment claims enough of conclusive proof that increasing the price of gasoline and diesel is harmful to the economy and kills jobs OR is this a false correlation?

    Because if it is correlated then we can with certainty say that Obama’s plan to raise the cost of fossil fuels to make alternative fuels competitive is an economy killer not a jobs creator as he has claimed. The figleaf of AGW will have been stripped of the vine. What’s the dollar amount hit again for every penny increase in gasoline? $1 billion/year or $40 million a day or something like that from my internet searches. How many jobs are lost per penny of increase in gasoline??????? I mean if it costs money in retail sales then that should translate into jobs. Minimum wage is $7.25/hr. $40 million/day / ($7.25/hr x 8 hrs/day)= 689,655 man days but then I am falsely assuming 100% of the money would have been paid to workers when in fact only a partial percentage would apply given overhead and profit.

    Comment by dscott — May 5, 2011 @ 10:23 am

  3. #2, of course there’s a correlation.

    And you should see the excuses. NY schools were on spring break, so bus drivers and cafeteria workers filed (seriously, you get unemployment $ if you’re off for a week? I thought there was a one-week waiting period). In general, AP says that DOL claimed it was “largely the result of unusual factors.”

    My observation this past weekend was that retail traffic was really weak.

    Comment by TBlumer — May 5, 2011 @ 10:36 am

  4. [...] today’s reported seasonally adjusted initial unemployment claims of 474,000 in [...]

    Pingback by BizzyBlog — May 5, 2011 @ 11:38 am

  5. [...] gas price and inflation shocks to sink in (it wasn’t until the last two weeks of April that initial unemployment claims seriously headed south), but May looks really, really [...]

    Pingback by BizzyBlog — May 5, 2011 @ 1:06 pm

  6. Tom, that phenomenon actually exists. Hourly school employees do tend to file for unemployment for both Easter and Christmas vacations (which is part of the reason why they still tend to get Good Friday or an alternate sixth day off). The difference is that, since the dates of Christmas vacation is pretty well set in stone, those can be adjusted for, while the moving Easter vacation cannot.

    There actually is a 1-2 (usually 2)-week period anchored by Easter where initial jobless claims are roughly 20,000 higher than in surrounding weeks. Given Easter was about as late as it could be this year, we should have expected the prior week’s numbers to be almost as high as they were. However, this week’s further jump is troubling.

    The key will be the next 2 weeks. If jobless claims elevated at 440K or higher each of those weeks, as I fear it will be, the economy is in serious trouble.

    Comment by steveegg — May 5, 2011 @ 8:47 pm

  7. Thanks, Steve. That is totally against the grain of what unemployment comp was supposed to be about, which is if you LOSE your job, not if you get an annually scheduled break.

    I did recall after I put up the comment that I was at a factory in NY in the late 1970s doing an inventory, during which the plant shut down for three days and most workers weren’t needed and I assume weren’t paid. They filed for unemployment for just those three days. Again, that’s not what the intent of the system originally was.

    As to today’s report, given that expectations were about 400K, what you’re talking about still leaves 50K or so vs. expectations unexplained by “one-time” factors.

    As for the next few weeks, the NSA to SA converters are pretty similar, and yes, they will tell us a lot.

    Comment by TBlumer — May 5, 2011 @ 9:14 pm

  8. [...] of course, the prior week’s “O…M…G” number was revised even [...]

    Pingback by BizzyBlog — May 12, 2011 @ 12:43 pm

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