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Claims back on track

As I mentioned last week, the unexpected rise in weekly unemployment claims that rattled the market could have been due to the vagaries of seasonal adjustment. This week's unexpected fall in claims suggests that I was correct.

The top chart shows seasonally adjusted claims, while the bottom shows actual claims. Actual claims have fallen the past two weeks, and now the seasonally adjusted claims number is catching up. What happened last week was that actual claims did not fall as much as the seasonals expected, probably because they didn't rise as much as expected in July. Note also that the actual claims number has hit a new low for the year, and the continuing claims number has been trending down since peaking in June of last year.

By next week, we'll probably see the adjusted number fall a bit further, to show that claims are about where they've been on average since January. In short, all the hoopla over claims has been an exercise in futility, because there has been no real change in the underlying fundamentals of the labor market so far this year. The much-anticipated double-dip recession is still a no-show in the data.

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