Falling Commodity Prices Will Cause Some Harm

Initial Jobless Claims (week ended 1/9/2016)

– New Claims (seasonally adjusted) 284,000. Previous was 277,000
– New Claims unadjusted, totaled 503,919, an increase of 98,548 from previous week
– 4-week Moving Average (seasonally adjusted)  278,750. Previous was 275,750

We were still in a period where post-Christmas layoffs were high and the seasonal adjustment is large. We may be seeing the jobs market get somewhat flatter.

 
Import and Export Prices (December 2015)

– Import Prices month/month -1.2%. Previous was -0.5%
– Export Prices month/month -1.1%. Previous was -0.7%
– Import Prices year/year   -8.2%. Previous was -9.4%
– Export Prices year/year   -6.5%. Previous was -6.3%

These are the result of 1) a slowdown in the growth of the world economy 2) lower commodity prices 3) a stronger US dollar.  Significant damage is being done to the economies of oil producing nations some of which could produce substantial political chaos.  Affected are:  the middle-east, African oil producers, South American oil producers, Canada and Mexico, and smaller oil drillers in the U.S. who borrowed money.  As the small drillers cannot services their debt we will see some local commercial banks take losses.