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New Unemployment Claims At 415K

By Big Tent Democrat

The Wall Street Journal has ingenuous coverage of the latest jobless claims report:

The number of U.S. workers filing new claims for unemployment benefits dropped sharply last week, reversing the previous week's spike and confirming the gradual improvement in the jobs market. [. . .] Initial jobless claims fell 42,000 to 415,000 in the week ended Jan. 29, the Labor Department said Thursday in its weekly report. The previous week's figures, which were distorted by snow that hit four Southern states, were revised to 457,000 from 454,000.

(Emphasis supplied.) So if the higher number for the previous week was "distorted," how can we know that the employment situation is "gradually improving?" To be sure, the 415k claims number this week is bad under any circumstance. More . . .

The jobs picture simply is not improving. The Wall Street Journal claims that:

Despite swings up and down, claims have been on a gradual downward trend since August 2010. The four-week moving average of new claims, considered a more reliable indicator because it smooths out volatile data, was broadly unchanged at 430,500 in the week ending Jan. 29.

But a review of the level of jobless claims in December demonstrates that there has been virtually no change:

The job market is improving but only at a moderate pace. That's the indication from initial jobless claims which for a third time in a row held little changed, at 420,000 in the December 18 week. The four-week average ended six weeks of improvement, up 2,500 to a 426,000 level that's still about 10,000 lower than the month-ago comparison.

(Emphasis supplied.) Thus the 4 week jobless claim average on December 18, 2010 was 426,00, 4,000 LESS than the February 3, 2011 4 week jobless claim average of 430,000. That 's not gradual improvement. Indeed, it is not an improvement at all.

To be fair, there is a slight improvement from the November 2010 numbers:

Initial claims fell 34,000 in the November 20 week to a far lower-than-expected level of 407,000 (prior week revised slightly higher to 441,000). The four-week average is down 7,500 to 436,000 for a nearly 20,000 improvement in the month-ago comparison.

(Emphasis supplied.) The fact is that the "gradual improvement that was occurring between August and November 2010 has simply stalled. Since November 2010, job growth has completely stalled.

And given the new "austerity" mania, there is a very strong possibility that there will be a new down spiral as aggregate demand is likely to fall. In the meantime, even the Wall Street Journal admits that the crude U3 measure of unemployment will likely not register a decline in unemployment when released tomorrow:

Federal Reserve officials last week decided to continue buying government bonds to boost the recovery because even though the economy is improving, t's still not strong enough to significantly reduce the unemployment rate, which stood at 9.4% in December. The jobs report out Friday is expected to show the economy didn't add enough jobs to bring down the unemployment rate in January.

(Emphasis supplied.) Unless and until aggregate demand shows a continuous increase, the jobs crisis in this country will not abate. This is the simple truth. The Beltway wantas to wish this reality away, but it is not going away.

And this attitude is creating our "new normal" of near 10% unemployment. It is scandalous.

Speaking for me only

Full post as published by TalkLeft on February 03, 2011 (boomark / email).