A big miss on private payroll estimates, followed by rising unemployment claims, tell a very different story than the 4% GDP growth that economists were bragging on in the first quarter.
Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 312,000 for the week ended May 31, the Labor Department said on Thursday.
The prior week's claims were revised to show 4,000 more applications received than previously reported. Economists polled by Reuters had forecast first-time applications for jobless aid rising to 310,000 last week.
Despite signs that the economy was in trouble in the first quarter, economists were saying “never mind, things are really beginning to heat up.”
And low and behold, these same economists are trotting out their excuse why hiring isn't as good as 4% GDP growth would indicate.
The current numbers are now close to levels seen in the years before the recession. From 2004 through 2006. the average for weekly unemployment claims was about 329,000, according to Labor Department data and Haver Analytics.
GDP growth was very uneven from 2004 to 2006 but we were creating enough jobs to keep unemployment at full employment with high labor participation rates.
Today, most economists have been revising their GDP estimates upwards, with some even making the claim that GDP growth for 2014 will come in at about 4% annually.
Instead Quarter One 2014 came in at a 1% contraction, making it the worse quarter since the first quarter of 2011.
People need to remember that most of the economists polled for survey estimates are folks who work for financial services firms that make a living on convincing you that the market will never go down, the economy is never bad and mostly what you need to do is buy now.
People also need to remember that those same financial service firms that have that sell-side bias sponsor most shows in the money media -- at CNBC and Bloomberg, for example.
In fairness however, the market does generally go up. Buying now is usually a good bet as long as you can hold forever.
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