Up And Down We Go: Jobs and Sales

The reports of the past two daysgive us a clear example of the way in which the optimists run the reporting of economic news. Yesterday it was retail sales. Today it is the normal weekly report on claims for unemployment assistance.

Let’s starts with yesterday.

Retail sales, if you read only the headlines, bounced back strongly. Sales were up about 9.1% in March and way above last year’s totals. Those same headlines spoke about the consumer finally re-awakening in a ‘sure’ sign that the economy is well along the road to recovery. The price ticket of items being bought is down considerably as retailers adjust their product mixes to a harsher environment, but this has ben more than offset by consumers buying more items per trip to the storer, and by a much higher number of people out and about shopping.

So it’s ‘let the good times roll’.

Well almost.

In a quirk of the calendar Easter falls into the March numbers this year, whereas it was firmly in April’s last year. So year to year comparisons are very difficult and likely highly skewed. So we should all breath deeply and wait for April’s numbers next month before we declare victory.

This Easter quirk is buried in most of the media pronouncements and you would be forgiven if you were unaware of it.

Contrast that with the skewed view that dominates today’s headlines about new claims for unemployment insurance.

New claims rose sharply last week, by 18,000 to 460,000, which was both unexpected and decidedly not good news. On its face it is a sign of a definitive stalling in any progress towards health in the job markets.

But, in contrast the its handling os sales, the media is trumpeting Easter as a likely cause of a ‘distortion’ in the claims figures, which we are told makes the figures unreliable as a pointer to the ‘real’ trend.

Hmmm. Heads I win, tails you lose.

Either Easter undermines both sets of data and therefore we should ignore both. Or it is insignificant for both and we therefore take them at face value. It isn’t a mix of the two. And especially not a mix that only benefits an optimistic interpretation.

My own take is that both reports are corrupted by the effects of Easter falling at an unusual time. This most probably threw off any seasonal adjustment algorithm being applied to the raw data. So we should accept neither as being significant until we can put them in the context of April. Remember: the April data will also be skewed by Easter, only this time by its unusual absence.

So.

What conclusion should we draw?

Nothing. The economy seems to be on track towards recovery. Sales appear to be headed up, but as yet we cannot tell at what velocity and how sustainable that growth is. Likewise, unemployment seems to have entered a sluggish spell where things are not getting worse, but nor are they improving much, if at all.

The one thing we do know for sure is that long term unemployment continues to haunt the economy at record levels.

And that’s not good.