New Claims for Unemployment Insurance Fall Slightly
New claims for unemployment insurance fell by 29,000 last week:
In the week ending Feb. 27, the advance figure for seasonally adjusted initial claims was 469,000, a decrease of 29,000 from the previous week's revised figure of 498,000. The 4-week moving average was 470,750, a decrease of 3,500 from the previous week's revised average of 474,250.
Here is a graph showing claims since 1967, the earliest date these data are available (the red line is initial claims, the blue line is the four week average):
To give a better picture of recent trends, here is the same series since 2000:
Jobless claims have been skewed in recent weeks because of severe snowstorms in February, which created backlogs in processing claims and kept unemployed workers from filing claims in some areas.Some analysts are noting that continuing claims fell to the lowest level in a year and hailing that as good news. But:
The number of people continuing to file claims declined to the lowest level in more than a year,... reaching 4.5 million. But when adding in those who filed emergency and extended benefits, the number was 10.5 million, just shy of a record set last month.There is a lot of uncertainty in these numbers due to the weather and the fact that weekly data are inherently noisy (the four week average removes some of the noise and gives a bit clearer picture, but it's still highly uncertain). The main thing to note is that initial claims remain well above the approximately 400,000 level needed for the economy to begin creating jobs. As long as claims remain above 400,000, we are still losing jobs overall and labor markets continue to deteriorate. And even when claims do fall below 400,000 that won't be the end of the labor market's troubles. It will take quite awhile to for labor markets to reabsorb all the workers that want jobs.
There's quite a bit of positive spin about these numbers, claims fell by 29,000, the four week average is down 3,500, continuing claims fell to the lowest level in a year, etc. But it's hard for me to put a positive spin on the labor market when it continues to shed rather than create jobs. The noise in these data combined with the uncertainties from the weather make it even harder to have much confidence in the numbers.
Looking at the numbers over the last several weeks in the graphs above, it's evident that the labor market is moving sideways -- there's certainly no sign yet of an aggressive downward move. Thus, labor markets are stalled and continue to need all the help they can get. But so far, while the government has implemented some job creation programs, the programs have not been large enough to make a big dent in the unemployment problem.
I don't expect Congress to do much more to try to stimulate job markets beyond a few token bills legislators can point to when reelection rolls around. In fact, sentiment seems to be moving in the other direction. There are many in Congress who are anxious to end the programs intended to stimulate labor markets and the broader economy as soon as possible. It's important that we resist these calls so that we don't remove the existing help that labor markets are getting, meager as it is, too soon.
