An Economy of Errors

Two reports about the economy, within one week of each other:

First report: (Sept. 24th) New unemployment claims drop unexpectedly!

WASHINGTON -- The number of newly laid-off workers seeking unemployment benefits in the U.S. fell for the third straight week, evidence that layoffs are continuing to ease in the earliest stages of an economic recovery.

The Labor Department said Thursday that initial claims for unemployment insurance dropped to a seasonally adjusted 530,000 from an upwardly revised 551,000 the previous week. Wall Street economists expected claims to rise by 5,000, according to a survey by Thomson Reuters.

Second report: (Oct. 1st) New unemployment claims rise unexpectedly!

WASHINGTON -- First-time claims for jobless benefits increased more than expected last week in the U.S., a sign employers are reluctant to hire and the job market remains weak...

The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists expected an increase of 5,000, according to a survey by Thomson Reuters.

So one week, they are excited to report that job claims fell from 551,000 to to an adjusted 530,000. The next week, they are surprised to report that the claims rose to an adjusted 551,000 -from- 534,000. Amazing...

Fundamentals of economic growth are more or less a given. In exceptional times, people construct elaborate theories to pretend the fundamentals can be ignored. (I recall breathless economic forecasters demonstrating how in theory, the tech bubble could go on expanding forever; a never-ending boom with no bust.)

But sooner or later they always come back. You cannot ignore the basic rules of national economies forever and get away with it. We listened to the music, now it's time to pay the piper, and he doesn't accept debit or credit.

The roots of our economy are being hacked away, and these people are trying to gauge its strength by counting the number of leaves that haven't fallen yet. I suppose if the whole tree falls down, they'll be delighted to report that an unexpectedly high number of new fungi growths indicates that life is returning to it after all...

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