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Market pessimism is distorting the facts

It's a sign of the market's deep-seated pessimism that an observer can look at this chart of weekly unemployment claims and say, as this morning's Bloomberg story put it: "More Americans filed applications for unemployment insurance last week, signaling firings stepped up as the economy slowed. Initial jobless claims rose by 2,000 to 484,000 ... the highest level since mid February." Or consider this headline from Drudge: "Jobless claims jump to highest since Feb."

If every little rise in claims signaled a slowing in the economy, and every little drop a pickup, then the economy has been on a super roller coaster this year, surging ahead and then braking, then surging, etc. The truth is that the fluctuations in this series so far this year have minimal in nature. Look at the longer-term chart below for perspective—claims this year have been remarkably stable. Where are the articles reporting this? "Jobless claims over the past 8 months have moved in a very narrow range, far below the levels of this same period one year ago, signaling an economy that likely is growing at a relatively moderate and stable pace."

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