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Great thoughts from David Rosenberg here:

There seems to be a consensus out there that the pace of house price deflation in the U.S.A. is abating because, in April, the Case-Shiller index “only” fell 0.7% after sliding 2.1% in March (the oft-cited improvement in the second derivative). The problem in coming to the conclusion that the pace of price decline is subsiding lies in the fact that the Case-Shiller is not seasonally adjusted — look what happened last year: the Case-Shiller index dropped 1.5% MoM in April after a killer 2.4% falloff in March, and we seem to remember similar calls from the consensus crowd that the worst was over then too. The bottom line is that home prices in April improve relative to March more than 90% of the time as winter weather turns to spring, and the average improvement is 40bps and it is not uncommon to see changes in the monthly growth rate of a full percentage point.

Now what about those jobless claims? Aggressive seasonal factors helped drag down the latest claims data down 52k in the July 4th week to 565k — the lowest level since January when the economy “only” posted a 741,000 drop in nonfarm payrolls. Now that was when the global economy was in freefall, but the current level of claims is still consistent with 350,000 drop in payrolls for the current month. That is not exactly a recession-ending development. Nobody seems to be focusing on the growing slack in the U.S. labour market (and its deflationary implications) — continuing claims up 159k to a record 6.88 million. This metric shows just how little labour demand there really is. The headline claims number only tells us that employers have become exhausted in issuing pink slips (though the firing rate is still far too high).

Here is the problem. That actual number of claimants is much higher than 6.88 million, as if that wasn’t bad enough, but closer to 9.8 million! That is right — and this is not being reported in the media. We have 2.5 million people still on the 2008 emergency unemployment compensation program; and on top of the 346,000 that have rolled into the benefit extension segment of the plan. Moreover, there are other stragglers too that are not counted in the reported total — but we can tell you that a grossed-up 9.8 million claimant count in a 155 million labour force is without precedent in the post-WWII era. Economists are still tripping over each other in identifying green shoots in what is still the worst labor market in living memory. Truly amazing.

Good stuff as always from Rosenberg

Source: The other GS.