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Jobless Claims

November 16, 2012 – 6:04 pm

Every week the government releases data on unemployment claims made for the prior week. These numbers are a leading economic indicator as they gauge the weaknesses and strengths of the job market. Last week claims rose sharply by 78,000, the highest number in 18 months resulting in a total of 439,000 people collecting benefits.

Too bad these numbers are essentially meaningless and in fact until mid-January the unemployment claim numbers are not going to give us a true picture of what is happening. Hurricane Sandy and the holidays are to blame.

This week’s numbers are very distorted because of the widespread damage by the storm. Claims were delayed and maybe are still being delayed with the power outages and massive damage preventing businesses and workers getting back to normal. This happened after Hurricane Katrina in 2005. The flip side is that after Hurricane Katrina there was a massive rebuilding effort that was the catalyst for an economic spurt. That same thing will happen but it will take time to be felt. Meanwhile, to muddy the waters further, there is usually a Christmas decline in benefits which is likely happening this year but we will never be able to decipher it.

To confuse the economic picture further, Sandy will likely negatively affect other data points. For instance I am sure there are few home sales happening in certain areas of the East coast. That could put a dent in next week’s home sales report. Then again a lot of reconstruction will be taking place. Many numbers are going to be impacted.

Good Trading
Steve Peasley

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