Weekly Initial Jobless Claims... Panicky

Weekly Initial Jobless Claims and the change in the number of insured unemployed portend to upcoming panic at corporate HQ.

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Weekly Initial Jobless Claims

This mornings regular reporting of initial jobless claims noted a weekly figure of 450,000. While the measure was 10,000 off the prior week result, it's still troubling in absolute terms. In fact, the four-week moving average of 440,500 is the highest its reached since April of 2002, which we remind you was at the tail-end of the last economic "contraction" and a couple quarters from stock market bottom.

With employment, things will be the worst toward the end, and signals arriving from retail, and already settled in within autos and housing, point to significantly higher unemployment ahead of us. An also troubling aspect of the report was the rise in the insured unemployed. Recent expert-commentary following Employment Situation Reports has highlighted the positive aspect of little change in the levels of insured unemployed. What will they say now???

The two components of unemployment are the newly unemployed and the continuously unemployed. While the inventory of unemployed has been growing, the flow of newly unemployed had been running at a steady rate. That's changing now for the worse. Insured unemployment (in other words, those collecting benefits) rose 114K in the week ended August 2nd, and that's up from the four-week average, also indicating a flow rate change. As a result, I expect we're about to enter the "panic stage" of the corporate mind's interpretation of the business cycle.

I think the business cycle, as seen within the mind of the corporate executive, goes something like this:

1. Denial - Business softening around them, but embedded memory of recent success is blinding
   
2. Worry - Maybe we should start thinking about pressuring our suppliers
3. Acceptance - Cut costs, but let's not forget about the coming recovery, so don't fire too many folks
4. Panic - Fire everybody before we go bankrupt and I lose my job and my options turn worthless
5. See a psychologist, take a long vacation, reinvent company and selves
6. Comeback - Watching Rocky movies, talking to executive recruiters
   
7. Success - New job, life is good again
   
8. Cockiness - I'm king of the world!
   
9. Denial....

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