Economists Who Are Always 'Surprised' Should Re-Think Their Models and Assumptions

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Today's report of Initial Unemployment Claims from last week is out and once again, the economists are "surprised" at the figures reported (via Reuters):

The number of Americans filing new claims for state unemployment aid rose unexpectedly to 428,000 in the week ended September 10 from a revised 417,000 in the prior week, the Labor Department said.

It was the second straight weekly increase and took initial claims to their highest level since the week ended June 25. Wall Street analysts expected a modest dip in new claims.

Once again, that is an upwards revision from the previously reported figure. I'm feeling a tad too lazy to go back through all my blog posts to find the last week when there wasn't an upwards revision from the previous week's report but I know that it has been months since there has been anything but upward revisions. At best there might have been a week when the numbers reported were not revised at all a couple of months ago but that's it.

Realistically, I have to admit that the continual 'surprise' by the economists is just a continuation of the overall cluelessness shown by the financial elites as evidenced by this yesterday from the World Bank head (also via Reuters):

World Bank President Robert Zoellick said on Wednesday the world had entered a new economic danger zone and Europe, Japan and the United States all needed to make hard decisions to avoid dragging down the global economy.

...snip...

Zoellick's speech focused on the shifting global landscape in which emerging market economies are playing a greater role in the world economy -- and increasingly in development.

He said developed countries had yet to fully recognize these global shifts were underway and still operated under a "do what I say, not what I do" policy. They preached fiscal discipline but failed to rein in their own budgets, and advocated debt sustainability yet their own debts were at record highs, he said.

While I can applaud a recognition of the role of developing nations in the global economy, Zoellick's prescription seems to this ol' country boy to be a prescription for hastening and worsening a global recession. This contrasts to IMF Director Christine Lagarde:

She said global growth was slowing, with advanced economies facing an "anemic and bumpy recovery." In contrast, emerging economies faced overheating pressures with rising inflation, strong credit growth and expanding current account deficits.

Lagarde said timid economic growth and weak public balance sheets in developed nations were feeding negatively on each other, fueling a crisis of confidence and restraining demand, investment and employment.

While there are fears and articles concerning a possible global recession, all that the continual calls for austerity do is make that global recession more likely.

Here in the US, we have the so-called "Super Committee" leaders claiming that they need to come up with budget cuts in order for inside the beltway village idiots politicians to:

...cast their mission as crucial — not just for the nation's finances, but for their constituents' faith in government.

Yeah, that's the ticket. I'm sure that at a time of increased poverty:

1. The nation's poverty rate rose to 15.1% in 2010, its highest level since 1993. In 2009, 14.3% of people in America were living in poverty. (The government defines the poverty line as income of $22,314 a year for a family of four and $11,139 for an individual.)
2. For middle-class families, income fell in 2010. The median household income was $49,445, down slightly from $49,777 the year before.
3. Median income has changed very little over the last 30 years. Adjusted for inflation, the middle-income family only earned 11% more in 2010 than they did in 1980, while the richest 5% in America saw their incomes surge 42%.
4. The poverty rate for children under age 18 increased to 22% in 2010, meaning more than 1 in 5 children in America are living in poverty.

that further cuts is just the thing to make everything all better again and all the politicians to be respected. Earth to Beltway Villagers: without that government spending you're trying to cut, the poverty rate would have been far worse than it already is:

Unemployment insurance helped keep 3.2 million Americans out of poverty in 2010, according to new statistics released Tuesday.

...snip...

Federal health programs, including Medicaid and the Children's Health Insurance Program, also helped hundreds of thousands of youngsters stay insured even though their parents lost employer-based coverage. Some 570,000 fewer children were uninsured in 2010 than in 2007, before the recession began.

...snip...

Roughly one in six Americans are on government aid, with the largest two programs being Medicaid and food stamps.

But federal and state budget crunches are swiftly chipping away at these safety nets. At least six states cut back on the number of weeks that the jobless can collect state unemployment insurance. Some states have reduced the generosity of their Earned Income Tax Credit, while Michigan recently limited the amount of time the poor can collect cash welfare benefits.

Do they all become pod people when they go to DeeCee or is there just something about being an elected official that turns once (possibly) reasonable people into the worst type of concern troll (definition 2)?

And because I can: