Jobless claims drop 11,000

Note: I had corrected this post title due to the data from the BLS. However, the data were from last week as the embargoed data from this week had yet to be put up. I have amended it back to the original title and replaced the quote from the BLS with this week’s language.

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The US Labor Department has indicated that:

In the week ending Oct. 2, the advance figure for seasonally adjusted initial claims was 445,000, a decrease of 11,000 from the previous week’s revised figure of 456,000. The 4-week moving average was 455,750, a decrease of 3,000 from the previous week’s revised average of 458,750.

As I wrote last week, jobless claims point to continued job weakness. Nevertheless, the trend is not out of line with historical data, especially when looking at the last two recoveries. My last post on lending should add to the sense that the US economy is muddling through and will not double dip this quarter. What happens going into 2011 is much more dependent on the path of foreclosures and the potential for a housing double dip.

Ironically, given some comments from Jim Bianco yesterday, it is unclear what effect this will have on markets. Participants have been increasingly counting on quantitative easing to boost the US economy at the expense of US trading partners and through a kick to risk assets. Marc Chandler mentions a Wall Street Journal article which goes so far as to suggest an intra-meeting pre-mid-term QE announcement by the Fed; that’s how much markets are depending on the Bernanke put.  As a result, the dollar is now trading in the 1.40 range to the euro and sterling is at 1.60, both weak levels for the US dollar compared to the recent past. If this data and tomorrow’s jobs data surprise to the upside, markets could sell off because there will not be as much QE.