Previous articles have connected the dots between housing and employment. There’s a feeedback loop whereby as employment worsens, it makes housing  weaker, which then reduces consumer equity and ability to borrow & spend. Rinse, repeat….

 

Thursday saw the weekly initial claims unemployment report, per usual. 476,000 new claims were expected. 500,000 was reported.  Economic recoveries usually see initial unemployment claims of half this number. But, to be fair, this is just 1 week’s data and as such is subject to fairly large weekly variation. So, the 4-week moving average is slightly more valuable. It rose to 482,000 —that’s the highest since December. And again, to be fair, the increase in unemployment claims over the past few weeks is being adversely influenced by the unwinding of 500,000 census workers becoming the newly re-unemployed.      Then again, part of the reason the initial unemployment claims rate has only been 9.7, 9.6, and 9.5% -and I can’t believe I’m saying only 9.7% — is because the census workers had government jobs and thus artificially and temporarily lowered the previous few months’ unemployment rate.  So, no improvement in the employment situation just yet, I’m afraid. These numbers -I remind you- are merely initial claims. You know this is just the tip of the iceberg, and that there are over 2X this number of people in need of full-time work in total. 32M Americans are in need of full time work. Over 20% of the labor force. That’s quite a recovery.   

 

Housing data continues to deteriorate. Early in the week saw housing data for August from the National Association of Home Builders -the NAHB- and from the Commerce Department.  The NAHB data showed the worst number in the history of the index -other than April 2009 -which was the lowest reading ever recorded on the index. NAHB for August showed a reading of 13.  For perspective, a normal economic recovery shows the index around 55. Average recessions show a reading of about 25-30. So an NAHB reading of 13 tells you this is not the same old recession. Sorry, I mean recovery. I keep forgetting we’re in a recovery.  Economists and Wall St say we’re in a recovery, so we must be.    By the way, if you’re curious about where this reading was in recent recessions:  it bottomed around 50 in 2001, and around 30 in 1990.  And again, please keep in mind that mortgage rates are now historically low, and house prices remain close to 30% below their peak 2006/2007 prices.  Yet no buyers.  But, never mind, this is apparently a recovery that will power earnings to an all-time peak next year -according to Wall St analysts.