In covering Thursday morning's report from the Department of Labor on initial unemployment claims, one of a relatively few economic reports showing strength these days, Associated Press reporter Scott Boak spread his enthusiasm over the result to the entire economy. It wasn't justified.
It's as if the poor guy has missed most of the pertinent other economic news during the past week, most of which — other than the stock market's recovery from earlier losses this year, which is more dependent on Federal Reserve Chairman Janet Yellen's moods than it is on economic fundamentals — have been anything but strong.
Boak even managed to ignore his own reporting from late last week (bolds and numbered tags are mine):
US APPLICATIONS FOR JOBLESS AID RISE, BUT STILL NEAR LOWS
More Americans sought unemployment benefits last week, but applications still stayed near historic lows that point to a stable job market.
THE NUMBERS: Applications for jobless aid rose 11,000 to a seasonally adjusted 276,000, the Labor Department said Thursday. The less-volatile four-week average rose 3,500 to 263,250. The number of people receiving unemployment checks has fallen 6.3 percent over the past year to 2.17 million. Weekly claims have now been below 300,000 for 55 straight weeks, the longest streak since 1973.
THE TAKEAWAY: Employers are confident that the U.S. economy will continue to grow [1] ...
KEY DRIVERS: The U.S. economy has shown signs of durability, as financial volatility and economic weakness have rocked major trading partners such as China, Japan and parts of Europe.
Consumers have largely provided the foundation for continued growth. [2] Prior job gains have translated into more spending at restaurants and online retailers. Many Americans have also stepped up their purchases of homes and cars, which has further aided growth. [3]
Still, the manufacturing sector has been struggling because of slipping demand in foreign markets and a strong dollar [4] that makes U.S. goods more expensive overseas.
[1] — For the economy to "continue to grow," it has to be growing. The idea that it is actually growing got shaken significantly during the past seven days by a steep downward revision to January consumer spending (from 0.5 percent to 0.1 percent; how does that even happen?), tepid February consumer spending (also up only 0.1 percent), weak durable goods sales and shipments, and a widening trade deficit. As a result, two of the more important entities involved in predicting economic growth are projecting that the first quarter of this year will come in below an annualized 1.0 percent. As of Thursday the Atlanta Branch of the Federal Reserve was predicting 0.6 percent, and Moody's was at 0.7 percent. Those figures are roughly the same as annual U.S. population growth. Thus, these estimates indicate that per-capita GDP is flat as a pancake.
[2] — As just noted, consumers are not "providing the foundation for future growth." Keynesians, who believe that people spending everything they have — and then some, if necessary — is what drives an economy's "durable" growth (it's not), have been the hardest hit. We aren't all that far away from consumers being blamed for the weak economy, which is nonsense.
[3] — Current new-home sales levels of about 500,000 units per year are still only about 60 percent of what they would be (roughly 800,000) in a genuinely healthy homebuilding market. On a seasonally adjusted basis, they barely rose in February, and fell in three of the country's four regions. Raw sales (not seasonally adjusted) in both January and February were lower than the same months in 2015. Existing-home sales fell 7.1 percent in February. Boak covered both related areas in AP writeups last week (here and here), meaning that he ignored his own reporting in claiming that housing is "aiding growth."
[4] — The manufacturing sector hasn't merely been "struggling." It's been contracting for five straight months, but may finally break its losing streak tomorrow when the Institute for Supply Management releases it March Manufacturing Index. (Even if it comes in positive, there's strong reason to believe, based on how negative many regional manufacturing indices have been, that ISM is overstating the manufacturing sector's health.)
Tomorrow's employment report will also be interesting, because February's report showed declines in hourly wages and weekly earnings. If that continues, the likelihood that consumers will be the "foundation for future growth" Boak claimed — which, as noted, already isn't the case — will become even more remote.
Cross-posted at BizzyBlog.com.
