FT Alphaville " Claims-ian economics, seasonality edition Here's the scarier of two versions of what's happening with initial jobless claims now: The chart is via Barclays Capital, which notes that after Thursday morning's release, the recent increases in the four-week average have now completely reversed the declines from earlier this year. That's the upturn at the end of the line. This morning's report also marked the twelfth straight week that claims in the previous week were revised higher. And here's the less scary version (via the St Louis Fed FRED tool): The difference, of course, is that the second chart is not seasonally adjusted, but it shows that the seasonal spikes are getting increasingly lower and that the recent upturn isn't so dramatic given previous similar movements. Look, it's hard to discern the precise impact of the borked-algo-related seasonality issues we started covering last year, and our last word on this came a few months back. The economics teams at Goldman and Nomura have calculated that the distortion was significant the last two years but has started to fade. To what extent it remains is uncertain. On initial claims, though, Nomura essentially predicted back in February that we would see something very close to this movement in the series. In other words, the labour market improvement signalled by claims earlier in the year wasn't as dramatic as we'd hoped, but neither does the increase now mean that there's been a meaningful slowdown. And that's one possible interpretation of the recovery-winter-followed-by-sluggish-summer pattern of the past two years: although the ups and downs haven't been entirely illusory, it's quite possible that things were never as bad as we thought (and the real-time data showed) in the worst periods of the recovery, and neither were they as good as we thought in the best times. Claims, remember, can be a funky and volatile indicator with its big weekly swings, later revisions, and the whole business of take-up rates. But our guess is simply that the economy and the labour market have continued to steadily, if too slowly, improve - but just aren't ready to accelerate the way we hope they will if/when the household formation trend of the past few years reverses and pent-up demand is unleashed. And not as quickly as if fiscal and monetary policy were looser. This assumes, of course, that the policymakers driving the bus don't take us over a cliff, fiscal or otherwise. And that Europe doesn't implode. And that China's landing is soft. And that oil prices don't... well, you know the list by now. Related links: Claims-ian economics - FT Alphaville US jobs and seasonality: the DeLorean edition - FT Alphaville This entry was posted by Cardiff Garcia on Thursday, April 26th, 2012 at 19:29 and is filed under Capital markets. Tagged with claims-ian economics, initial jobless claims.