Drop in Jobless Claims Adds to Optimism About Broader Recovery
Jobless claims fall again and holiday spending could increase. Is the economic recovery strengthening?
New unemployment insurance claims fell from 393,000 to 388,000, the lowest level since
The new figure out from the
[Read about how unemployment benefits boost the economy.]
Clearly, 388,000 represents significant improvement, but it is also well above levels associated with a healthy labor market. In 2006, when GDP growth and employment were both robust, the jobless claims figure was often near or below 300,000.
It can be tempting to cheer every downward blip in jobless claims, but it can also be an exercise in futility, as the figure can be volatile. However, the weekly figure has recently been creeping downward, slowly but steadily. The four-week moving average, which fluctuates less than the weekly figure, has now also fallen below 400,000 -- seen as a critical level for job market health.
The recent decline in jobless claims is "encouraging both for growth and the labor market," as
There are other reasons to be optimistic about
[See why middle-class neighborhoods are disappearing.]
In addition, the ailing housing market showed one glimmer of hope today. Despite a small downtick in new home construction last month, building permits were up 10.9 percent, possibly presaging an increase in future construction. "When added to the drop in claims numbers, you can see that economic conditions are moving upward at an accelerating pace,"
Of course, it would be premature to declare a strong, sustainable recovery on the basis of a small spate of promising figures. Indeed, some experts say that payrolls will have to add at least 130,000 jobs on a monthly basis to keep up with population growth. And external factors, like the European sovereign debt crisis, could easily derail the fragile recovery.
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