“New Jobless Claims Drop More Than Expected” the headline blared. At least it did originally; they’ve since softened it somewhat to more reflect reality. The interesting part is how far out of their way the AP is going to make the economy look like it’s turning around even though spending is flat, unemployment is still 9.5% (or 9.4% depending on the day), and thousands upon thousands of people are still filing for unemployment daily.
Many analysts pointed to Thursday’s drop in jobless claims as evidence of a trend signaling fewer job losses in coming months, particularly compared with the flood of layoffs earlier this year.
Still, job openings remain scarce. And most economists expect the unemployment rate to keep rising to 10 percent or higher by the end of this year. On Friday, the government will report the July unemployment rate.
First-time claims for jobless benefits dropped to a seasonally adjusted 550,000 last week, down from 588,000 in the previous week, the Labor Department said Thursday. The four-week average of claims, which smooths out fluctuations, dropped to 555,250, its lowest point since late January.
“The lower claims figures are an important economic development and confirmation that the economy is turning the corner,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
Is it really a sign that we’re turning a corner? New claims are still up, not down, they’re just not up as much as predicted. While it looks like the number of new claims is going down (it is) that isn’t a reliable estimate of anything because they’re still new claims! In other words, these are people who are newly unemployed.
Using the AP’s own numbers don’t even bear out that things are about to turn around. Let me repeat something from above:
most economists expect the unemployment rate to keep rising to 10 percent or higher by the end of this year.
If unemployment is at 9.4% now (the actual number will be revealed later today) and 500,000+ people keep joining the rolls, and the rate is expected to hit 10%, at what point does any of that represent a “turnaround?”
Why is the AP trying so hard to make things look rosy when they’re not?