Jobless claims lowest in 9 months

Jobless claims were reported as 521,000 on a seasonally-adjusted (SA) basis for the week ended October 3. This is the lowest reported figure for initial claims since January 3. The data came in lower than expectations and was matched by a drop in continuing claims to 6.04 million.

While both numbers are still high by historical standards, the trend has been down since March for initial claims and June for continuing claims. The widely followed 4-week averages are at their lowest levels for initial and continuing claims since January and April respectively.


Of course, the unadjusted numbers have been in the 400s since the beginning of August. Because of the downward drift in initial claims, I do not expect them to tick significantly higher despite the usual seasonal pattern. 

Overall, that means the employment market is weak enough to contribute to rising unemployment rates and job losses for the next few months.  However, as the trend is toward lower numbers, I would anticipate this to end in Q1 at the latest. But, because of increasing labor force participation, I expect the base unemployment levels will continue to rise. This fits in with my general view of a weak recovery vulnerable to exogenous shocks.

Update: One more thought – we have what I would describe as a structurally high private unemployment level. At a minimum, we could change our automatic stabilizers to add more stimulus as depending on the severity of the downturn. For instance, it would be a good start to extend unemployment benefits to 39 weeks automatically if the rate of unemployment rises more than 1% over six months/one year and to 52 weeks if it rises more than 1.5% over that time frame.

As an example, Germany has a more robust system of automatic stabilizers and it is thought this has helped them recover from recession faster. We might benefit from some kind of automatic but prudent counter-cyclical stimulus.

  1. Anonymous says

    Yea but the non-seasonally adjust rose.. 68,000 more went on extended benefits and an estimated 400,000 had their extended benefits expire and thus completely dropped from all rolls.

    When people start getting cold and hungry we’ll see riots.

    1. Edward Harrison says

      You are pointing out the difference between a recession and a depression. The recession is a period of decline in output, income, retail sales, etc. We are leaving that period. But, the depression is still with us in the form of structurally high unemployment, stagnant to declining real wages and a need to deleverage. Maybe Americans will wake up from their stupor and demand a change. That probably won’t happen unless we see a complete collapse.

      1. Anonymous says

        ‘GASP’…you used the ‘D’ word!…we can’t use that word…it isn’t true!!!

        I need to max out my AMEX to feel better.

        Unfortunately, in all seriousness, you are correct.

Comments are closed.

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