Ever notice that when economic numbers “disappoint” its always because of some one-time, special circumstance that seasonal adjustments failed to account for (and why should we “adjust” for them, even if we could?)? Over the past two years, some of the BS excuses I’ve seen have ranged from plausible to impossible, and everywhere in between. Today, the Department of Labor (via Bloomberg) tells us :
Applications for jobless benefits jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed today. A spring break holiday in New York, a new emergency benefits program in Oregon and auto shutdowns caused by the disaster in Japan were the main reasons for the surge, a Labor Department spokesman said as the data was released to the press.
I’m curious – and if anyone can answer this please enlighten us in the comments – how, on God’s green earth, a (regular) spring break holiday in New York could have possibly caused initial claims to increase at all, let alone to any meaningful level such that it was worth mentioning explicitly. Additionally, I’m not sure to which Oregon unemployment program the article refers, however as far as I can tell, it is the (up to) 6-week EXTENSION of existing benefits available to those who have exhausted all other programs, see OEB-3 details here.
As far as auto plant shutdowns, I’m not so sure those 1. increased unemployment (are workers at idled plants laid off, put on temporary leave with pay, without pay, some combination, other?) and 2. had any effect this week at all. GM doesn’t appear to have issued any 8-K’s about plant closures. Ford filed an 8-K with the SEC on 4/11 in which the company acknowledged:
We now expect that beginning in the last week of April and continuing into May, certain of our operations in the Asia-Pacific region (including certain of our joint venture operations) will be affected by shortages of components and vehicle kits as a result of the events in Japan. Although this likely will require us and the affected joint venture affiliates to reduce or temporarily cease production of certain vehicles in the Asia-Pacific region, we do not expect this production disruption would have a material impact on our overall results.
Notice there is no mention of disruptions to U.S. operations.
Toyota, likely the firm most affected by the Earthquake/Tsunami/Nuclear situation in Japan issued a 6-k on 4/20, wherein the company said:
Production at North American plants is to be suspended on Mondays and Fridays between April 26 and June 3. Also, production from Tuesdays through Thursdays will be carried out at approximately 50% of normal.
As far as I can tell, it’s not immediately clear whether any plant closures included lay-offs which would have resulted in more people eligible to (initially) claim unemployment benefits. Most of the other announcements from auto manufacturers I’ve read indicate that firms were first cutting back on overtime and working on days-off, not eliminating normal shifts.
There’s some other curious nuggets in the Bloomberg article, like this one:
The productivity of U.S. workers slowed in the first quarter and labor costs rose as a growing economy prompted companies to boost employment, another report from the Labor Department showed today.
The measure of employee output per hour increased at a 1.6 percent annual rate, after a 2.9 percent gain in the prior three months. Expenses per employee climbed at a 1 percent rate after dropping 1 percent.
This seems to be another case of a journalist (and possibly some government type) not understanding basic math. If the above numbers are correct, productivity did not slow; the rate of change (e.g 2nd derivative) of productivity slowed, but productivity still increased, just at a slower rate.
All things considered, I’m not sure why so many people (including several who should know better) still think unemployment is going to keep decreasing when there’s little incentive to hire more. So doing would eat-into corporate margins (and thereby stock prices), and so long as firms can get more productivity out of their existing employees, they have little-to-no reason to hire more.