G3 Recap 5-26-11

Main Items:

  • US Initial Jobless Claims increased to 424k last week vs 404k expected and 409k previously
  • US 1Q GDP growth, 2nd revision was unchanged at 1.8% SAAR, vs 2.2% expected. Personal consumption was notably weaker at 2.2% vs 2.8% expected and 2.7% previously.


  • Italian Business Confidence declined to 101.3 in May vs 102.7 expected and 103 previously


  • This article in the NY Times summarizes the ~33% decline in migration rates, probably as a result of the recession. What it didn’t discuss is the likely impact of negative equity preventing people from migrating to find better jobs. Also, this has likely increased the structural rate of unemployment. If we assume that 77% of the population are of working age and also a 64% labor force participation rate on the 5mm fewer people who migrated, (as compared to 2004-2005) we get a net ~2.5mm unemployed people who are likely to remain unemployed until they are able to migrate. Against a labor force of 153mm, this suggests that the structural unemployment rate is higher by ~1.6%.
    This chart from Barclay’s supports the idea that immobility is impacting employment: