Have we turned the corner on jobs?

This morning the Department of Labor said that weekly jobless claims fell by 21,000 to a level of 434,000 last week.  This is the lowest level of claims since July of this year.  Economists had expected that jobless claims would rise by 3,000.  Meanwhile, the four-week moving average number of jobless claims fell by 5,500 to a level of 453,250.

Analysis: While it may seem as if this is good news, and I am certain that the business press will present it in that way, I am lukewarm about these data.  Not because I mistrust their result.  No, I am so-so about the data because as I have said many times on the blog, one data point does not mark a trend.  So the question is: is this the turning point?  Again, we have been down this road before.  Last spring and summer it looked as if the employment situation was going to improve then…if you trusted that the data were meaningful.

The problem is that the data only look positive when you tweak them in some way.  That is, you start making exceptions for the data.  For example, remember the all of those U.S. census workers being laid off?  We could have looked at the data by saying, “Well the private sector is adding jobs, so unemployment isn’t so bad if you overlook the over hundred thousand census jobs lost.”  Several of these “adjustments” to data are fine.  But when the only way you can feel positively about the data is to modify them, well then I become, or rather, remain lukewarm.

The fact is that the U.S. has lost a hell of a lot of jobs in the last 2+ years.  The fact is, that consumer spending remains weak.  The fact is, that new hiring remains weak, too.  In other words, I don’t feel as if we have turned the corner on the jobs situation.  The “game of chicken” that I have been highlighting for months continues.  However, my intuition is that the intensity of the stare-down has lessened.  In talking with several business people over the last month, they have indicated sharply that they have been holding off hiring until there is a Republican Congress in place.  Mostly this is a tax related issue and the entrepreneurs that I spoke with feel that Republicans will come to their rescue.  But there it is again: we can only feel good about the possible improvement in unemployment if Republicans win Congress.  See, we have to modify the state of things again to feel good about them.

We have not turned the corner…but then we are not retrograde either.  We’re stuck.

Importance grade: 10; by now it is a tired old refrain, but the employment situation (along with U.S. consumer spending) remain the most important economic stats on the planet.

Jason