During the week ending December 2, initial unemployment claims fell by 10,000 more than expectations.
The Department of Labor’s weekly report on initial unemployment claims revealed that during the week ending on December 1, initial unemployment claims fell to 370,000. Economists had been expecting 380,000 initial claims. Unfortunately, this represents absolutely no progress from this point last year. (For the week ending December 10, 2011 the revised figure for initial claims was 371,000.) Worse yet, last week’s revised figure for initial claims was increased from 393,000 to 395,000. Jobless Claims Fall to Pre-Hurricane Levels
From the report:
In the week ending December 1, the advance figure for seasonally adjusted initial claims was 370,000, a decrease of 25,000 from the previous week’s revised figure of 395,000. The 4-week moving average was 408,000, an increase of 2,250 from the previous week’s revised average of 405,750.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending November 24, a decrease of 0.1 percentage point from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 24 was 3,205,000, a decrease of 100,000 from the preceding week’s revised level of 3,305,000. The 4-week moving average was 3,309,000, an increase of 7,750 from the preceding week’s revised average of 3,301,250.
The Federal Reserve released its Third Quarter Flow of Funds report on Thursday. The report indicated continuing recovery of household net worth, increasing real estate valuation, decreasing mortgage debt and increasing equity in home ownership. Nevertheless, we are still a long way from complete recovery. Household net worth is still $2.5 trillion less than the $67.3 trillion household net worth during the third quarter of 2007. That amounts to a shortfall of 3.71 percent.
From the report:
Debt of the domestic nonfinancial sectors expanded at a seasonally adjusted annual rate of 2 ½ percent in the third quarter of 2012, 2 ½ percentage points less than in the second quarter.
Household debt decreased at an annual rate of 2 percent in the third quarter. Home mortgage debt contracted 3 percent, continuing the downtrend that commenced in early 2008. Consumer credit rose at an annual rate of 4 ¼ percent, the eighth consecutive quarterly increase.
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At the end of the third quarter of 2012, the level of domestic nonfinancial debt outstanding was $39.3 trillion, of which household debt was $12.9 trillion, nonfinancial business debt was $12.1 trillion, and total government debt was $14.3 trillion. Household net worth—the difference between the value of households’ assets and liabilities—was about $64.8 trillion at the end of the third quarter of 2012, $1.7 trillion more than at the end of the second quarter. In the third quarter, the value of corporate equities and mutual funds owned by households expanded $800 billion and the value of real estate owned by households increased about $370 billion.
The major ETFs expected to respond to the weekly report on initial unemployment claims and the Third Quarter Flow of Funds report are:
Industrial Select Sector SPDR Fund (NYSEARCA:XLI) +0.04%
Financial Select Sector SPDR Fund (NYSEARCA:XLF) +0.28%
Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) +0.13%
SPDR S&P Retail ETF (NYSEARCA:XRT) +0.34%
Consumer Discretionary Select Sector SPDR ETF (NYSEARCA:XLY) +0.68%
Bottom line: Both the weekly report on initial unemployment claims and the Federal Reserve’s Third Quarter Flow of Funds report reveal that we have a long way to go before the economy gets back to where it was in 2007 (if that is even possible). Weekly Unemployment Claims at 370K