Initial Claims report manifest a stagnating state of underemployment
Fred Day
Oct. 18, 2006

Initial Claims - the number of people receiving state benefits and the insured unemployment rate both show a stagnating state of underemployment.

Market expects the initial claims to come at 310K. The analytical models manifest a far better result – perhaps between 295 and 305K.

The number of people receiving state benefits when measured statistically against income growth and home refinancing levels, an interesting nonlinear correlation is found. The trend clearly shows people are employed systematically at lower levels of wage and their capabilities. The lower earnings is systematically made up with borrowings.

This report is no different. The insured unemployment rate is also showing the same result. The problem is that those who are looking for professional jobs are ending up with low end $30Kjobs. The employers need low end workers and they cannot find many unless a professional gets fired from big corporation, depletes all the resources trying to find a decent job and then finally settle on a low end job hoping for the best in the future.

The long-term impact on the economy is bad. At this time this translates to low unemployment, super-high underemployment. Later the stagflation will change into deflation. The stocks will eventually suffer and bonds benefit from this. But for now stocks will rally and bonds move sideways.

Initial Claims report manifest a stagnating state of underemployment
Fred Day
Initial Claims - the number of people receiving state benefits and the insured unemployment rate both show a stagnating state of underemployment.
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