An important jobless claims milestone

This morning initial jobless claims data were released by the U.S. Department of Labor.  The figures were: initial claims fell by 34,000 to 407,000 – this is the lowest level recorded since July 2008.  The four-week moving average for the figure was down 7,500 to 443,500.

Analysis: Clearly an important milestone has been reached in the jobless claims data.  Despite the fact that jobless claims reached their lowest level since July 2008, the four-week moving average shows only a small improvement.  In these moments of uncertainty, when the data don’t affirm/disaffirm a particular direction then intuition is needed to assess the reality on the ground.  This is, and has been a part of my analysis for my entire career.

My intuition right now is that the ice has begun to thaw in the unemployment arena.  In the past when we have seen an improvement in the jobless claims data I have not called an end to the freeze.  Instead I have emphasized the fact that these data can show an improvement, yet counter-intellectually, actually represent a worsening situation.  That is because jobless claims are sometimes not filed by those who are completely discouraged.  Thus, you can sometimes see a decline in the data that more represents defeat, than success.  My belief is that is not what is happening right now.

Remember in October that the U.S. business sector added 151,000 jobs.  Now the initial jobless claims are following with stable, calm, undramatic numbers.  This is a good sign.

It is also my belief that the all important retail business fourth quarter, ending at the close of January, will show a more confident, if not spend-thrift consumer.  That should give businesses the momentum and confidence necessary to begin hiring.  And that hiring will likely be at a pace that will finally start to lead to a gradual improvement in the unemployment rate.

Importance grade: 10; there still is no more important economic statistic than the U.S. initial jobless claims and the unemployment rate.  Jobless claims, good: unemployment rate, flat.  I feel a transition is underway, though.

Jason