Fresh Fuel For Bush-Kerry Feud

It's the economy, stupid.

While the threat of terrorism and Iraq dominate the headlines, the performance of the economy between now and November could well determine the next occupant of the White House.

The government will release the monthly employment report on Friday, with both political parties sent to pounce on the numbers, depending upon what they show.

The early betting favors President Bush. Economists polled by CBS MarketWatch expect 235,000 new jobs to be created in July. If that's the case, the White House will crow.

But if the job numbers are disappointing, as was the case in June when just 112,000 new jobs were created, Sen. John Kerry and the Democrats will open fire on Mr. Bush.

Most economists expect the unemployment rate to remain unchanged at 5.6 percent. (The rate can remain unchanged despite job growth because more people enter the labor market in search of work.)

In a related development, the number of people filing for unemployment insurance for the first time fell by 11,000 to 336,000 in the week ended July 31, the Labor Department said Thursday.

The one-week figure was slightly below the 341,000 that had been expected by economists surveyed by MarketWatch.

The four-week average of new claims, which smoothes out distortions in the weekly figures caused by weather and other one-time factors, rose by 6,750 to 343,500, the highest level since the end of June.

Meanwhile, the number of Americans continuing to receive state unemployment benefits fell by 35,000 in the week ended July 24, to 2.91 million.

The nation's insured unemployment rate, measuring the percentage of claimants among those eligible for benefits, remained unchanged at 2.3 percent.

After having plunged by about 60,000 in the second half of last year, the level of initial claims is largely unchanged over the past three months. Initial and continuing claims are now at levels consistent with job creation of about 150,000 to 250,000 jobs per month.

"The absence of volatility in the number of new filers in July has been surprising, with the apparent trend in claims during the period pretty much in line with results from the past three or four months," said Steve Stanley, economist at RBS Greenwich Capital Markets.

"Certainly, these data do not point to any shift in the underlying fundamentals of the labor market."