Business

Jobless Claims At 18 Month Low

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A bit of good news to report today amid the preparations for New Year’s celebrations. Jobless claims fell more than expected last week.

From WSJ:

Initial claims for unemployment benefits fell by 22,000 to a seasonally adjusted 432,000 in the week ended Dec. 26, the lowest level since July 19, 2008. The four-week average of new claims, which smoothes volatility in the data, dropped by 5,500 to 460,250, its 17th consecutive drop. That was the lowest level since Sept. 20, 2008.

The Labor Department said in its weekly report, released Thursday, that 4.98 million people had been collecting jobless benefits for more than a week in the week ended Dec. 19, a decline of 57,000.

So, the unemployment rate might actually drop…

The Labor Department is to release its snapshot of December’s labor market on Friday, Jan. 8. Economists at Wrightson ICAP predicted in a note Wednesday that the jobless rate, last reported at 10% for November, may have inched lower to 9.9% in December.

Still, to put into perspective how big of a hole we’re in right now…over the past decade we’ve added less than 500K new jobs to the economy.

From CS Monitor:

The Labor Department counts 108.5 million nonfarm private-sector jobs as of November, which is 1.5 million fewer than when the decade began. The public sector added jobs during the decade. But the tally of all US jobs, including government positions, is positive by only 464,000 jobs for the whole 10-year stretch. That’s a big problem for a nation where population has risen by about 27 million residents during that time, according to Census estimates.

464K new jobs and 27 million new residents.

Yikes.

Playing the blame game about who’s responsible for this situation is an exercise in futility at this point, but if the economy starts turning around and we add a significant amount of new jobs to the rolls in the next few years…who do we have to thank for that?

  • http://www.frankhagan.com/blog/ Frank Hagan

    Justin, care to give us your definition of success in this area? If the economy adds 200,000 jobs a month by the end of 2010, will you consider that success? Do you have a number? Unemployment down to 5%?

    The economy will recover, but not because of the administration. It always recovers no matter who is in office because of the energy and drive of the American people. The question really becomes a bit more complex: will the Administration’s efforts help the recovery or hurt it? There is a persuasive idea that FDR’s handling of the Great Depression actually prolonged that long period of economic trials, by creating a climate of uncertainty for investment. Investment wanes in uncertain times. Looking back, will we see that investment by companies was helped or hurt by the uncertainty introduced by proposed sweeping changes in energy taxes, health care costs, increased financial regulation, etc.? My company isn’t hiring anyone until these issues are resolved, and then it will assess if we can afford the new requirements.

    The problem with our current situation is that when unemployment reaches 10%, you have about 7.2 million jobs lost. You would need 500,000 jobs per month created (you have the job losses, plus the long term unemployed, plus population growth) to get back to 5% unemployment. Source: Heidi Shierholz, an economist at Economic Policy Institute, in USA Today.

    So is it Obama’s fault? The answer has more to do with your political persuasion than it does with economic realities. This President, and the next, is likely to see higher than normal unemployment rates.

  • Tully

    over the past decade we’ve added less than 500K new jobs to the economy

    Selective use of endpoints to draw a false picture. Employment in 1999 was at an all-time high at the peak of the dot.com bubble, 2009 is hitting trough in a post-bubble recession. We’ve lost over 5 million jobs in the last year…were those jobs never added in the first place?

    More than 10 million people collected unemployment benefits the week ending Dec. 12th, the most recent data I could get from the BLS. That was an increase of about 200K from the previous week. And over 20 million collected unemployment at some time during 2009. here are still over 6 people unemployed for every job opening.

    That initial claims may be bottoming out would be nice, but until the loss rate turns into a growth rate instead, we’re still going deeper in the hole. The forecast for 2010 doesn’t look all that hot either.

    I also question those population growth estimates. Latest estimates I’ve seen are about 15-20% lower, and still don’t count illegals who have returned to their home nations due to lack of work. That last bit doesn’t strike me as a bad thing.

  • http://www.frankhagan.com/blog/ Frank Hagan

    Tully, you know what they say about statistics …

    I agree with you on 2010. From a political standpoint, the Dems have to worry not only about 2010, but also President Obama’s re-election prospects in 2012. Typically, a president who has a recession at the beginning of his presidency has a chance at re-election because things usually get better within 4 years. But we may be at 8% unemployment in 2011, making it a hard year for the Dems to win the Executive branch again.

    Most of the stimulus money will be raining down in the coming election year (gee, I wonder if that was planned?) So there may be some economic benefit from that for public workers, some construction jobs, etc. But it won’t help unemployment because there’s very little in the bill to stimulate private industry jobs. We may see a large capital gains cut, payroll tax cut, or other business-related incentive from the House Dems this spring to try and at least get an uptick in time to get re-elected.