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Initial Claims Climb 30K to 554K

July 23rd, 2009 Michael McDonough
As I anticipated, and explained in my US Week Ahead, initial claims experienced a significant uptick this morning, which will likely be continued next week. In reality, this increment was probably due to a correction in what has been overly optimistic data stemming from erroneous seasonal adjustment factors.

Fed Chairman Bernanke in his recent testimony to Congress discussed the fact that weakness in the jobs sector and housing market will continue to be an Achilles heel for a US economic recovery. But, I anticipate that, excluding the anomalous data over the past three weeks, claims will slowly begin to improve. However, given such a weak base and initial claims forward looking ability to predict payrolls, it is very probable the overall employment situation will still get worse before it gets better. The unemployment rate likely to move above 10%. Typically, an initial claims level of around or below 350K would lead to increases in payrolls, but we are still far from those levels.

US Initial Claims

Source: St Louis FRED
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