Jobless Claims Hit 7 Year High

Whilst a lot of attention is focussed on the passage of bailout mark II, US economic data continues to deteriorate. Initial Jobless Claims hit their highest levels since September 2001 at 497k. The 4 week moving average hit a 6 and half year high at 474k.



Continuing Claims hit a 5 year high 3.59 million. Some 45k of the intial claims are attributed to Hurricane Gustav. Even deducting that number, jobless claims are clearly in recession territory.

Of course everyone will be wating for the House vote on the bailout bill tomorrow, however pay attention to the payroll numbers and ISM services index because once the euphoria of the bailout bill wanes, the focus will return to the economic data and earnings.

My feeling has been for a while that the US stockmarket is in a state of denial with respect to the economy and earnings, that is that it has not fully discounted a recession and its effects on company earnings. When that reality sinks in it will pave the way for new lows.