Release of GAAP-Based 2009 Financial Statements of the United States Government Delayed. With no related formal announcement that I can find, the U.S. Treasury has posted on its Web site, http://www.fms.treas.gov/fr/index.html, that the 2009 GAAP-based U.S. Government financial statements — mandated by Congress — will not be published until February 2010. They had been scheduled initially for release in mid-December 2009.

My estimate remains that full GAAP-based accounting will show the actual 2009 annual deficit to be about $8.8 trillion, up from $5.1 trillion in 2008. Those details will be found in the updated hyperinflation report. While there certainly have been a number of complicating events for the government’s accountants to assess in the last year, having accurate and timely information this month would be useful to those debating current conditions and issues. Delayed until February, any unhappy accounting results may not surface now until after the health care package and related fiscal concerns have been put to bed by Congress and the Administration.  

Week Ahead. Given the underlying reality of a weaker economy and a more serious inflation problem than generally is expected by the financial markets, risks to reporting generally will favor higher-than-expected inflation and weaker-than-expected economic reporting in the month ahead. Such is true especially for economic reporting net of prior-period revisions.

Unemployment and Payroll Employment (November 2009). Due for release on Friday, December 4th, November payroll employment is expected to have declined by roughly 120,000, less than the initial 190,000 employment drop in October, while the November unemployment rate is expected to hold at 10.2%, per Briefing.com.

Ongoing weakness indicated by underlying economic series would suggest a greater jobs loss than the consensus estimate and a rising unemployment rate, but the Bureau of Labor Statistics (BLS) has the ability to bring in the headline numbers anywhere it chooses to.

In terms of help-wanted advertising, the Conference Board’s newspaper index for October held at September’s historic low. The online help-wanted advertising measure showed that new online ads in November were down 24.0% year-to-year, compared with a 24.6% annual decline October. For the newly seasonally-adjusted numbers (a difficult adjustment to make for a new series in such a volatile environment) the November new online postings fell 0.8% from October, which, in turn, was down 1.2% from September.  The seasonally-adjusted series has been in steady month-to-month decline since August 2009.

The purchasing managers surveys are showing deterioration in employment conditions.  The November manufacturing survey saw the glow fade from the cash-for-clunkers spike, with the diffusion index easing to 50.8, down from 53.1 in October, which, in turn was up from 46.8 in September. A reading below 50.0 indicates outright jobs contraction. The latest non-manufacturing report was for October, where a clunkers-free environment had the October index falling to 41.1 from 44.3 in September.

New claims for unemployment insurance have been declining on average in the last several months, but such does not mean a turnaround in the employment picture. With the extreme economic contraction — unprecedented as to duration and depth in the post-World War II era — what is being seen here most likely is the beginning of some bottom-bouncing, where heavy lay-offs may have run their courses to a certain extent, at least temporarily, but where the pace of hiring is declining, too. Weakness in help-wanted advertising confirms the downside pressures in hiring.  

In terms of ongoing monthly payroll jobs loss, the actual November number likely continued to hold around 500,000, of which 200,000 is pending formal recognition in the February 2010 benchmark revision to the series. The other 300,000 loss could be seen in Friday’s reporting, particularly with the effects of prior-period revisions taken into account.

Suggestive of a flattening or even minor decline in the unemployment rate, the October rate surged well beyond consensus to 10.2%, from 9.8% in September. To the extent the surge was due to poor quality seasonal factors, any distortion could be reversed in November’s reporting. Indeed, any happy surprises with this number likely would be due to that circumstance, not to improving employment conditions.