June 05, 2003

*Sigh* More Bad Business Cycle News

*Sigh.* Atrios links to an AP report on this morning's bad economic news--an ungood unemployment insurance claims number for the very last week of May, and an ungood manufacturing orders number for April. It may be time to shave another tenth of a percent or two off of the forecast growth rate for 2003... *Sigh.*

Jobless Claims Rise to Five-Week High; Factory Orders Drop in April - from Tampa Bay Online: WASHINGTON (AP) -The number of American workers filing new claims for jobless benefits climbed to a five-week high last week as companies coped with an economy that is struggling to get back on firm footing.

The Labor Department reported Thursday that new applications for unemployment insurance rose by a seasonally adjusted 16,000 to 442,000 for the work week ending May 31. The increase pushed claims to their highest level since the week ending April 26. In another report, orders to U.S. factories fell 2.9 percent in April from March, marking the largest decline in 17 months, the Commerce Department said. The decrease was a lot deeper than the 1.8 percent drop economists were forecasting.

Manufacturing, which has slashed jobs and cut production, has been a major trouble spot for the economy. However, a more forward-looking report released Monday suggested that manufacturing may be poised for a turnaround. The Institute for Supply Management reported factory activity declined at a much slower rate in May...

Posted by DeLong at June 5, 2003 10:38 AM | TrackBack


You're getting financial news from Atrios?
I came here to get the scoop on the economy!

Posted by: Alexander on June 5, 2003 11:02 AM

Brad, you need some cheering up.

ISM data for May show orders up, both factory and non-factory, suggesting that the April collapse was a one-month splat, rather than a real disaster. Commercial paper issuance has made its biggest 10-week gain since just prior to September 11 (monetary policy has found another conduit). Mortgage refinancing is on the moon (the old monetary policy conduit is still working). Inventory ratios are still near all time lows. And the ECB is making life a bit easier - not much, but a bit. Now, don't you feel better?

Posted by: K Harris on June 5, 2003 11:43 AM

Oh, and Bank of Tokyo/Mitsubishi reports chain store sales up 2% in May, vs expectations of a 1.5% rise, which should avoid a repeat of April's ex-auto retail sales disaster. Car sales in May were OK, too.

Posted by: K Harris on June 5, 2003 11:49 AM

Well then, I keep asking myself, who is buying bonds? Why? There has been another run on 10-year treasury and corporate debt. Would you buy a 10-year treasury at 3.3%?

Posted by: anne on June 5, 2003 12:33 PM

Alex - The story isn't written by Atrios, it's written by AP. The data is readily available. Not only that, it's non-spinnable. Jobless claims up, factory orders down.

K - Correct me if I'm wrong, but haven't the "new orders" data risen to near 60 twice since the start of 2002, only to come crashing down again each time months later? And during that same time period, haven't we lost hundreds of thousands of jobs? What's the point of being excited about the data if 1) it doesn't help job creation and 2) it comes crashing down again in a few months anyway?

Maybe breaking above 50 for new orders is better than nothing, but even assuming it doesn't crash again like its done twice before, it's going to take years to get back to the same number of jobs we had at the peak in 2000, to say nothing of absorbing all the new entries into the labor market since that time. This is clearly the worst labor market in decades, and not getting any better any time soon.

Jimmy Mac

Posted by: Jimmy Mac on June 5, 2003 02:55 PM

"Worst labor market in decades" ??

Are we still talking about the US ?

As you may not recall, the last time unemployment was this high, it was less than ONE decade ago.

Posted by: Oroborous on June 5, 2003 03:03 PM

A great quote from Forbes today:

"The pick up in the economy is still a forecast," said Paul Kasriel, chief economist at Northern Trust. "The economy here and now is still very weak."


Posted by: IssuesGuy on June 5, 2003 03:36 PM

Anne asks who is buying long-term bonds that pay only 3.3%. Great question when even the White House economists are forecasting increases in interest rates. So I can hold short-term T'bills that pay 1.2% now and get possibly 5% returns in a couple of years when the economy recovers or I can lock into 3.3% for 10-years. Maybe the market is suggesting that the economy recovery is not around the corner after all? Or do they think the U.S. is about to break out into fiscal responsibility really soon????

Posted by: Hal McClure on June 5, 2003 05:05 PM

K Harris writes:
>Oh, and Bank of Tokyo/Mitsubishi reports chain store sales up
>2% in May, vs expectations of a 1.5% rise, which should avoid a
>repeat of April's ex-auto retail sales disaster. Car sales in May >were OK, too.

I had thought that a second May chain sales report was weaker than this, though (or am I dreaming? I remember a figure of 1.1%).

As far as car sales go, I think OK is a reasonable summary, but see:


Chrysler's sale in the first days of this month apparently fell off the table (down 10%). Yes, that's only Chrysler, but the other two of the Big 3 domestics are cutting production now as well.

Greenspan's comments recently have been interpreted as meaning that another rate cut will be coming this month, and one can always hope that the nth time will be the charm. I guess the stock market thinks so (yes! my portfolio has some life in it! :-)).

Posted by: Jonathan King on June 5, 2003 08:25 PM

Jimmy Mac,

The ISM data are not infallible, and do tend to swing pretty hard from month to month - lots of factory data series swing pretty hard from month to month. ISM data remain the most recent broad measure of factory activity available, and have a decent record of forecasting economic performance. Not to be dismissed. Factory orders were up 2.1% in March, down 2.9% in April. They are just about flat so far this year. Flat ain't terrible for the acknowledged worst sector of the economy, when the most recent (ISM) data show a pick up coming. Flat ain't good for a sector that still tends to lead the rest of the economy. As for the jobs question. Sorry, but the labor market isn't everything....and it lags, so looking at the labor data doesn't help you know where the economy is going. I am pretty sure we are in the soup right now. All the jobs data do is remind me of that. I am also pretty sure (Brad has convinced me, don't you see?) that the labor market is going to stink for a long time. I still want to know where we are going and what the respective odds are of continued expansion or a return to contraction.

Jonathan King,

Yep, I cheated on the chain store sales. I slipped in expectations, so I could say better than expected. Slack was expected. A better than expected sort of slack was what we got. Don't tell Brad. I was trying to cheer him up.

Posted by: K Harris on June 6, 2003 04:35 AM
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