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Claims: much ado about nothing (cont.)





As I predicted last week, and a few weeks ago, today's reported decline in weekly claims for unemployment has got the market excited. Claims fell by more than expected, and bonds and stocks are reacting predictably to a positive growth shock. In reality, though, nothing has really changed as far as claims go—the past few months of claims gyrations have been all about seasonal adjustment factors.

The top chart shows seasonally adjusted claims, while the bottom chart shows the raw data. Claims actually rose a bit last week, but the rise wasn't as much as the seasonal factors expected (because not as many auto workers were laid off as is usually the case), so the adjusted number fell. This same pattern should be repeated over the next two weeks I believe, so stay tuned for more (seasonally adjusted) excitement.

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