Productivity Cools, Jobless Claims Rise (both more than expected)

[papau]

http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=5&u=/nm/20040205/bs_nm/economy_dc

Productivity Cools, Jobless Claims Rise
By Anna Willard WASHINGTON (Reuters)

U.S. business productivity rose at a slower-than-expected pace in the fourth quarter and at the lowest rate in a year and jobless claims rose unexpectedly last week, government reports showed on Thursday.

Non-farm business productivity, or worker output per hour, increased at a 2.7 percent annual rate in the final three months of the year after an upwardly revised 9.5 percent pace in the previous quarter, the Labor Department said.

The advance was the slowest since a 1.5 percent gain in the final quarter of 2002 and was lower than the 3.0 percent clip expected by analysts. <snip>

The Labor Department said separately that claims for state unemployment aid rose 17,000 to 356,000 in the week ended Jan. 31 from a revised 339,000 in the previous week.<snip>

Analysts were expecting claims to dip to 340,000 from the originally reported 342,000 in the week ended Jan. 24. <snip>

The reports will get close scrutiny ahead of Friday's release of the Labor's January report on employment. Partly encouraged by recent falls in jobless claims, economists are forecasting non-farm payrolls to increase 150,000 and for the unemployment rate to stay at 5.7 percent. <snip>

http://www.dol.gov/opa/media/press/eta/ui/current.htm

http://www.bls.gov/news.release/prod2.toc.htm

Note the lack of discussion of falling insured UE because of a million folks exceeding the 26/39 week max in the first few months of 2004.

Note also that they have dropped the line on how many folks have been unemployed for a "long" duration.

Note also that Bloomberg in "revision 1" now no longer says the expected producitivity was 3.0 - making 2.7 a drop, but instead says the expected productivity was 2.5 - making productivity of 2.7 a "good news" number.

Not that we are spinning a bit.

[xchrom]

1. the weight of real unemployment figures

are going to show up in this economy -- and the news won't be good.
i live in the bay area -- a relatively rich part of the country -- and things remain dicey around here. this is goin on a long time for people to feel insecure -- it's bound to affect productivity -- if you are going to be laid off any way your mind may not be on your job.

[seasat]

2. When you add this to the people losing unemployment,

it looks really bad. The Center on Budget and Policy Priorities recently released a study that predicted that record number of people were due to lose their benifits the first 6 months of this year.


From CBPP study:

An estimated 390,000 unemployed workers will exhaust their regular benefits in January. About 15,000 of these workers live in states that qualify to provide additional weeks of unemployment benefits under a permanent, but extremely limited, federal/state program known as the Extended Benefits program. As a result, the number of unemployed workers who will exhaust their regular benefits in January without qualifying for further unemployment assistance is 375,000. As noted, this level of exhaustion would be higher than any other month on record.
...
The number of unemployed workers expected to exhaust their regular benefits in the first half of 2004 before finding work totals 2 million.<8>

An estimated 1.97 million unemployed workers thus are expected to exhaust their regular benefits without qualifying for further aid.

In no other six-month period on record have so many unemployed workers exhausted their regular benefits without qualifying for additional weeks of unemployment assistance. (Again, this finding remains true after adjusting for labor force growth.)

With this number of people being forced to find some sort of work, expect the wage growth to really lag. This could possibly hurt consumer spending the first of this year. The sad thing is there is over 20 billion in the trust fund for federal unemployment and they could extend it. Of course, it would require reimbursing some of those intergovernmental bonds and that would require withdrawal from the general revenue and there might be enough funds for an additional tax cut to one of Shrub's campaign donors.

[RDANGELO]

3. The *bush economic policies

producing simultaneous large budget and trade deficits appear to have stymied the short lived recovery from the tax cuts. It will be interesting to see the reports on job creation.