Resilient U.S. Labor Market Rebounds: Initial Claims for Unemployment Benefits at 3-Month Low
This picture is NOT consistent with an economy in recession:
WASHINGTON -- The number of U.S. workers filing new claims for unemployment benefits fell unexpectedly last week for a fourth-straight week, suggesting that a resilient labor market at the start of the year might keep the U.S. economy from sliding into recession.Initial claims for jobless benefits fell 1,000 to 301,000 in the week ended Jan. 19, the Labor Department said Thursday. That marked the fourth-straight weekly decline to a four-month low. Wall Street economists had expected a sharp increase of 19,000.
The four-week average of new claims tumbled 14,000 to 314,750, the lowest level since Oct. 6 (see chart above, click to enlarge).
Bottom Line: At the onset of the last two recessions (March 2001 and July 1990), initial unemployment claims were close to 400,000, and at the onset of the 1980 and 1981 recessions new claims for unemployment benefits were close to 500,000. This extremely positive news about the health of the U.S. labor market over the last month (301,000 claims) pretty much guarantees that we are not in a recession.
9 Comments:
That doesn't make any sense.
How can jobless claims fall while unemployment rises?
According to Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York "This is nothing more than a seasonal adjustment problem. This period of distortion will soon be over, and the upward underlying trend will reassert itself."
From the NY Times Worries That the Good Times Were Mostly a Mirage
News from the National Association of Realtors For all of last year, sales of single-family homes declined 13 percent, the most since 1982, and prices dropped for the first time in at least four decades.
Even Alabama's unemployment rate is rising to levels not seen since 2005.
The worst is not over yet. Now the market is crying for a rescue of bond insurers. "A leveraged loan logjam on bank balance sheets, Europe's frozen securitisation market and rising consumer credit risks must be tackled if a plan to bail out ailing U.S. bond insurers is to help end the global credit crunch."
Quite possibly we will not see an indication of the extent of damage and strife caused by the evaporation of the fantasy economy until sometime during this summer of 2008.
Now if I could just figure out what kind of inflation we are going to be seeing and if I should get rid of all my dollars before total debauchment of the dollar occurs.
Remember the whole "jobless growth" thing a few years ago, well maybe now those same people will come up with the concept of a "joblossless recession" :-)
The December unemployment rate rose, but these data reflect the last three weeks, which are in the month of JANUARY. Watch for a decline in the January unemployment rate.
If you belive the BLS numbers that come out with most of the gains from the B/D modle which is being revamed your a better man then I am. Most people on Wall Street know these are a fairy tale but truth doesn't sell stocks.
There is a difference between unemployment claims and the number of unemployed.
Also, the number of unemployed is only half of the unemployment rate. The other half is the number of people in the labor force. If a significant amount of people drop out of the labor force, then the unemployment rate can increase even if the number of unemployed decreases. But I doubt that's the case here.
I have read there is an "exodus" of Mexican workers from the country because of state immigration enforcement. If so, we might see that showing up in the numbers. I hope this does not lead to inflation!
anonymous,
Go ahead and convert all your dollars to euros and stuff them under your mattress. In 10 years, we will all be laughing at you.
Its funny because there was a similar topic discussed on a local talk radio show here in town. The topic was "Should you convert some of your assets to euros?"
This is just so hilarious, because its just an example of foolish, uninformed investors chasing returns. I almost feel bad for these people....almost
Another thing about the falling dollar...
I love it when people complain about the falling dollar and in their next sentence they talk about all the US manufacturing being outsourced abroad.
If you really think that outsourcing is a real problem, then you want the dollar to drop even lower. The only way outsourcing would slow down is if it no longer makes sense economically. If the dollar keeps dropping, it might no longer make sense to build that car factory in Mexico.
I am not saying I am against outsourcing, but if you are going to be a populist lunatic (cough, cough Lou Dobbs), at least understand what the consequences of a low dollar really are.
Machiavelli999:
Remember, the falling dollar is one reason the European and Asian auto manufacturers build manufacturing and assembly plants in the U.S. - as a currency hedge.
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