514K new jobless claims; inflation remains muted

Source: AP

New jobless claims dropped to the lowest level since January and the prices of many household goods stayed low last month, positive signs of stability for the fledgling economic recovery. The decline in jobless claims shows companies are cutting fewer workers, though the drop isn't yet steep enough to signal new hiring, economists said. And the low level of inflation is holding down prices as Americans slowly regain their appetite to shop despite rising unemployment and tight credit conditions.

The Labor Department said Thursday that first-time claims for jobless benefits dropped to a seasonally-adjusted 514,000 from an upwardly revised 524,000 the previous week. The fifth decline in six weeks was below Wall Street economists' forecasts, according to Thomson Reuters. The four-week average, which smooths fluctuations, fell for the sixth straight time to 531,500. That's the lowest since January and about 125,000 below the peak reached in early April.

(snip)

The tally of people continuing to claim benefits dropped by 75,000 to 5.99 million, its first time below 6 million since the week of March 28. Continuing claims data lags initial claims by a week. Many economists expect that job losses will fall below 200,000 in October from 263,000 in September. That's still a large amount, but would be the lowest total since August 2008.

In a separate report, the Labor Department said consumer prices rose 0.2 percent last month, matching analysts' expectations. Prices excluding the volatile energy and food categories also rose 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast. Over the past 12 months, consumer prices fell 1.3 percent, reflecting a severe recession that has kept a lid on inflation across a wide range of products and services. Excluding food and energy, prices rose 1.5 percent., The lack of inflation has given Federal Reserve policymakers the room to leave interest rates at a record low near zero since December in an effort to give the economy a boost.




Read more: http://news.yahoo.com/s/ap/20091015/ap_on_bi_go_ec_fi/us_economy

whatsoever

not on sale.

Yep, just one item, but look around.

you'll see that the CPI does have candy prices going up..0.91% nationwide city average for candy and chewing gum. So you can't point to that small portion of the CPI and say it's indicitive of an overall trend. Food prices overall have gone down 0.3% (food at home). The data can be searched at Bureau of Labor Statistics

Don't know about where you live, but here, where's it hot, air conditioning is required nearly year round. It was 92 here yesterday, and this is no small expense. Gasoline rose 4 cents last night. My property taxes rose 40% this year. A gallon of milk at Albertson's is $5.29.

It's not just candy.

Meanwhile, I'm with you regarding the economy in general.

Just because the number of jobless claims have gone down, it doesn't mean anything if few or no jobs are created.

And of course deflation is always a possibility.

and many more are underemployed.

:sarcasm:

The government needs to stop pulling numbers out of their ass just to make happy headlines and start looking around the real world.

The govt has a conflict-of-interest when it comes to determining inflation. Some organization should come up with a true inflation rate in an effort to expose the govt for deliberately understating inflation. This could be announced with great fanfare every month. Determining an honest inflation rate is crucial. We need a trusted organization to crunch the numbers and expose the government's dishonest numbers.

Neither the President, nor his advisors have any access to the data until the night before release. BLS is politically neutral, doesn't make predictions (except for long-term occupational employment projections) and has no interest except accurate figures. Why do you think differently, and why do you think inflation is understated as opposed to previously being overstated?

The BLS is a branch of the Dept. of Labor. And the Dept. of Labor is headed by the Secretary of Labor who was appointed by Obama. So yes, the administration has everything to do with the CPI-U. I noticed that you used the term "inflation", which cannot be used interchangeably with "CPI".

As far as an administration having nothing to do with inflation... that's a bit off the topic at hand, but it really isn't correct either. There are many things that presidential administrations can do (or not do) that can have an impact on inflation. Bank bailouts is one example. Regulating (or failing to regulate) Wall-street is another. Stimulus packages is another. There are many others.

As far as the DOL being "politically neutral"... I worked in government for many years. Despite what anyone tells you, there is very little in government that is politically neutral. In the case of the CPI, there is a massive amount of money at stake. A lower CPI benefits government and corporations while reducing the standard-of-living of ordinary citizens. Furthermore, the CPI has a direct impact upon the federal budget. Example: A deflated CPI reduces Social Security and SSI payments, perhaps delaying that day of reckoning when the SS Trust Fund must redeem Treasury Securities in the fund to pay benefits. Another example: TIPS & I-Bond rates are tied to the CPI. An artificially deflated CPI is a way to reduce spending on the sly. There are massive conflicts-of-interest in play here involving massive sums of money. It would be quite naive to believe that when it comes to the determination of the CPI, there are (as you state) "no interests except accurate figures".

Your last question is more complex and too lengthy to address here, but I'll mention three changes implemented in the 90s after a lot of beating of drums by Alan Greenspan and his ilk:
1) calculating housing costs by "equivalent rent"
2) hedonic adjustments
3) substitution/geometric weighting
And now we have the US understating the cost of living relative to the foreign CPI composite by a very significant amount. I'd suggest you look into this in more detail.

And, of course, there is also the anecdotal evidence of millions of people who buy things every day, which should not be so easily dismissed.

BLS is administratively part of the DOL, but DOL has no input into the management or running of any of the programs. The Commissioner of BLS was appointed by Bush. No one outside of the program office has access to any of the data prior to release and the offices are locked down with no entry to those not assigned to that office without escort. The night before the release the Sec Labor and the President are given the initial release. Where in that process, and by whom, is the manipulation supposed to occur?

All of which, and your other points about the CPI-U are true. But that does not mean that the career economists/statisticians are not neutral...they have no incentive or reason to manipulate especially when they are forbidden from trading in any products directly tied to the CPI. The only person in BLS who is politically appointed is the Commissioner. At best he can influence broad methodology.


Ok..all three are controversial, but my question was how they understate inflation. But let's take a quick look anyway.
1) The purpose of the CPI is to look at Consumption. Housing has a strong investment component. Therefore, to negate the investment portion, a rental equivalent is used to divorce the consumption part from the investment part. That's the official reason. If you're claiming the real reason is to understate and/or manipulate, then please show how the the official explanation is not true. Merely pointing out or claiming a lower index by the method does not mean that that the concept is dishonest.

2)hedonic adjustments. Items change over time and to maintain continuity you have to adjust for quality changes. Hedonic adjustments result in both higher and lower changes than they would without adjustments. Hedonic adjustments are certainly not perfect...computers are a pain in the ass to adjust, and there's legitimate arguments about precisely how to do it and what components and what weights are appropriate. I'm not aware of any evidence to suggest that proper adjustment is not the real purpose or any way in which the numbers are specifically manipulated.

3)substitution/geometric weighting. A Laspeyres index assumes no substitution and so gives the maximum price change possible. But substitution does occur and to ignore that will OVERSTATE the actual change in prices. Geometric means indexes are used only at the base level for the specific area (bread in Los Angeles, for example) and not hamburger for steak as many detractors falsely claim. At the higher index level, a Laspeyres index is still used. Research suggests the differences since the change to geometric means has been minimal. Again, where's the evidence that the intent is manipulation or that the concept is dishonest?

to describe the average costs of what people are forced to consume, so that when they have to eat dirt because vegetables and meat are too expensive, the cost of living would show a decrease, hence, the assumption consumers are better off, when in reality, they are in a pica nightmare?

Or is the purpose to show changes in time over a fixed set of goods, goods which were assumed to be part of the typical life, that is, a reasonably good life?

This substitution is doing the first, while hedonic adjustments are designed to accomplish the second.

Still no answer as to why food and energy were dropped altogether. And I could not care less about the technicians and their motivations. These type of people developed the nuclear bomb, following their orders to do this or that. People in charge supplied the motive and means to do what they wanted to do - be able to threaten nuclear annihilation without having to actually do it, except for the demonstration in Japan.

What will your housing component do about people like me, who have had a paid for house for 23 years with no intention of ever selling or taking a mortgage to get money out of it as a financial asset? It's a place to live, the only charge the property taxes against it each year. The notion of housing as investment to owner-habitors is really new, created during the last bubble.

level position whose boss is appointed by the President in office?

And that politicians want good news to hand out? That's why the CPI basket is tampered with all the time, including putting new homes in there now, because they ARE falling in price, and long excluding food and energy, including gasoline and electricity, on the grounds that they are too volatile? Which means they change quickly, and why would that exclude from an index, except these are things everyone buys, and new homes are strictly limited to a small group.

These numbers are designed to underreport inflation, so that good news can be had, and money can be saved on COLAs everywhere by the government and big business.

Please, either wake up or stop spreading disinformation, whichever applies in your case.

The Sec Labor doesn't have anything to do with the internal workings of BLS either. It's only administratively part of DOL. BLS has only one Presidential appointee, the Commissioner, and the current Commissioner is a Bush appointee. There's no part of the process where the politicians can intervene..they have no access.

New homes are not part of the current basket, I have no idea where you got that misinformation from. And food and energy are certainly part of the CPI-U. The core CPI is a sub-set and is not the main number reported.

The numbers were designed to as accurately as possible reflect average price changes...previously the numbers were overstated.

Please learn what you're talking about before arguing with someone who's been dealing with these numbers and problems for years.

are increasing in price have been replaced by things bought at very great intervals, but are falling in price, if not to get a low inflation number?

Oh, the head of the BLS is appointed by the President, but that grants him no access. Check.

And please don't pull that authoritarian bullshit with me. People "dealing" with these problems for years have "dealt" the interests of the general public out. Otherwise, there wouldn't be a nuclear disposal site on top of my water supply, seniors wouldn't be denied an increase in the cost of living while Congress gets a raise, the minimum wage wouldn't have increased a couple of times in 25 years while Congress gets two dozen pay raises during the same time, poor dears.

Can you apply some analysis as to WHY the changes I'm commenting on were made, why is energy and food not included?

Or would you like to just pull rank on me, good progressive that you are?

gold wouldn't be selling at over 1000K . Morans :eyes:

it's only 500k new claims. Hurray!!! :sarcasm:

Just because the number is lower does not mean it is not like arterial bleeding. This has to be stopped. The executive is supposed to react to emergencies, with the support of the legislative.

Bueller? Bueller?