Labor market clearly improving

This morning the Department of Labor released weekly jobless claims data (I can’t wait to not feel like I have to report this data).  The results are encouraging.  While the weekly number showed an increase in jobless claims of 18,000 to a total of 409,000, the four-week moving average showed a decline of 3,500 to 410,750. 

Analysis: All of the jobless claims data in the last 5 weeks points to one thing: the job market is stabilizing and improving slowly.  This is evidenced by:

• a reduction in the number of jobless claims
• increased numbers of jobs as indicated by payroll data
• an increase in the ability of economists to predict the data – this means things are not volatile, but stable
• the revisions generally are not wild – again, an indication of stability

Thus, if you are banking on a double dip recession then you are going to have to place a bet on some sort of extreme event occurring.  Such an event would need to be of the magnitude like deeply renewed hostilities in the Middle East.  Like the Iraqi government failing and the political situation devolving into civil war; or Israel raging a war versus Iran.  Right now these events look very unlikely.

Also of note in the data…remember last weeks pivotal jobless claims report that showed only 388,000 claims?  That number was revised upward to 391,000.  This is a minor correction.  However, the degree of the miss was to the under-estimating side of things.  This isn’t something to be concerned about right now.  But it is something to note and to store away in case the next several revisions also show an over-estimation of the reality on the ground.

Importance grade: 7; honestly, the jobless data have less import now than they did two months ago.  For almost two years my importance grade on these data was 9-10.  Now my intuition suggests a downgrade in the importance of the jobless claim data.

Jason