We keep hearing from our friends on the left that it's all about jobs and the economy. I wonder why we haven't heard anything about this?
The number of Americans lodging new jobless claims dropped to the lowest level since February, the government said on Thursday in a report showing surprising strength in the U.S. job market.
The level of new claims, which gives an early reading on the resilience of the job market, plunged by 29,000 to 386,000 in the July 19 week, down from a revised 415,000 in the prior week, the Labor Department (search) said.New claims were far below Wall Street expectations for 413,000 applications, and the lowest since the week of Feb. 8. It was also the first time since then that initial claims were below the critical 400,000 mark, a level viewed by economists as the sign of a soft jobs market.
One week does not a trend make, but coupled with the flat line we've seen on unemployment over the last several cycles, this could be really good news.
Posted by Rich at July 24, 2003 12:13 PM | TrackBackA five-week low? Sorry, but I'll keep my champagne on ice.
Posted by: Chris Wage on July 24, 2003 7:02 PMRich..I've noticed you pointing at initial jobless claim numbers before as showing evidence of strength in the economy, but think through what they mean...It's the number of people who became unemployed that week. When fewer people are working, there are fewer people left to lose their jobs and thus fewer initial jobless claims. To give you an example..a couple of years ago, it felt like almost every week that I heard about a friend in the tech industry losing their job. These days I rarely hear from friends telling me that they've gotten laid off. Why? Because many of my friends are still unemployed and have no job to lose.
The health of the job market comes down to two factors..the number of people who lose their jobs and the number of people who were unemployed and find new jobs. It's the latter that still needs to pick up.
Posted by: Manish on July 25, 2003 3:23 AMAs the article I linked said, first time jobless claims are a leading predictor of job growth, which makes sense, since before you start creating jobs, you have to stop losing jobs.
Additionally, your point would only make sense if a large portion of the workforce was out of work. 6-7% is not a large portion. I wouldn't expect to see a diminishing returns effect like you describe until unemployment hits 30-40%.
AS I said, one week does not make a trend, but this news, coupled with a steady unemployment rate, does provide an indication that the job market is beginning to recover.
Posted by: rich on July 25, 2003 10:49 AM Rich, I'm not sure that the news is really all that good. Consider this from the AP news:
"Although the jobless rate dipped to a two-month low of 6.2 percent from a nine-year high of 6.4 percent in June, much of decline's July represented the exodus of 470,000 discouraged people who abandoned job searches because they believed no jobs were available."