High Frequency Economics' Jim O'Sullivan, who was recently listed as a top U.S. economic forecaster by Bloomberg BRIEF and crowned MarketWatch's forecaster of the year, thinks jobless claims are doomed to jump after falling to 330k last week and 335k the week before that.
O'Sullivan expects a reading of 375k today, which compares to the Street's expectation for 350k.
But that's no reason to freak out.
Jobless claims are likely to surge today. Is the economy suddenly collapsing again? Absolutely not. Other confidence data continue to show more resilience, as does the equity market. Weakness in GDP was overstated by a reversal of exaggerated strength in defense spending and inventories in Q3, and probably also some hurricane effects. The surge we expect in claims today reflects payback for the plunge in the prior two weeks, with the trend probably close to flat.
Payback in claims after two very low readings would be consistent with this month’s data being affected by the same seasonal adjustment problems as in January 2008, which had an identical calendar configuration. As we discussed in our Weekly Notes, that was also the start of the recession, so we do not expect the patterns to match up after this week.
A research firm cited by the Wall Street Journal last week noted that California likely under-reported their claims and that we would see some payback in the near future.
Initial claims will be published at 8:30 AM ET this morning. Follow the release live at BusinessInsider.com.
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