Jobless claims creeped up a whopping 43,000 last week to a total of 474,000 last week according to U.S. Department of Labor data. This is the highest level of jobless claims since August, 2010. Because the data can frequently be volatile folks generally look at the four week moving average. That figure rose by 22,250 to 431,250. Furthermore, today’s results exceeded economist’s expectations considerably.
Analysis: Importantly, the Department of Labor attached several caveats to this morning’s jobless claims figure that they feel account for the surge in jobless claims. Most of the one-time factors had to do with the timing of certain state governmental quirks around the country and a slight increase within the auto industry. While this may be comforting, it is also not encouraging.
Ideally the economy is robust enough that it overcomes minor one-time factors to create jobs. Currently, that is not happening. So while the U.S. consumer continues to do his/her part – spending money, saving money, and looking for work – U.S. businesses continue to be chintzy in their hiring.
Eventually the lack of hiring will only shoot businesses in the foot. Consumers need to be confident enough to spend money. If they are worried about their jobs and their finances then they save money, rather than spend it. Duh. Right now it appears to me that many businesses are being penny wise and pound foolish. Ultimately, what is at stake is the strength of gross domestic product (GDP) growth.
It is unclear whether we are seeing a permanent shift in the way U.S. businesses hire, or not. I will continue to monitor this situation very closely, because frankly, companies ought to be hiring. Revenues are up and expenses are very low. Eventually there will be enough sales that new hiring will have to take place to relieve the pressure on over taxed employees.
I am not distressed enough to change my opinion of U.S. stock markets: that a rising tide of around 10% returns will lift nearly all boats. However, expect to see me continue to emphasize jobless claims data on the blog until we see an improvement in them.
Importance grade: 8; at the moment I will take the one-time factors the Department of Labor mentioned in today’s release at face value. However, I consider jobless claims data to be on probation until there is a significant improvement in the next month.
Jason
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