Initial Claims for Unemployment Insurance Increase to 500,000
Initial claims for unemployment insurance took a turn for the worse and climbed back to 500,000, the highest level since late in 2009. From the report:
In the week ending Aug. 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week's revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week's revised average of 474,500.Here's a graph of the 4-week moving average since 2000:
Initial claims are above the "breakeven" level where there are neither job losses nor job gains, and this level indicates continued job losses. Initial claims have been fairly flat for the last several months and show no sign of making a strong downward movement, and there's little in other data series to suggest such an improvement is just around the corner.
I'm not sure what it will take to move policymakers to action. So far they have adopted a wait and see approach to the recovery even though conditions remain pretty bad, and things are not improving as fast as their forecasts said they would. While this latest piece of bad news hopefully has policymakers at least questioning the wisdom of the "wait and see" approach, I doubt this will be the piece of evidence that breaks through the resistance to doing more to help the economy. It's too easy for policymakers to make excuses to keep waiting, e.g. to say that unemployment is mostly a structural problem and hence out of their hands (but see here), that this is noisy weekly data that we should discount, etc. They will continue to see incoming data in the most optimistic light possible, to rationalize away bad data, and drag their feet. As I've said again and again, the economy needs more help from both monetary and fiscal policymakers, but they are letting unfounded fears about deficits and inflation get in the way of a more activist stance.
