Here is the release from the Department of Labor (DOL). Initial jobless claims dropped from 477,000 last week, but remained about 24,000 above expectations. Either way you look at it, unemployment remains a huge issue. Just to stop the unemployment rate from rising, the initial claims number needs to get down to 300,000 per week. Anything above that means unemployment is rising. Why would a new unemployment claim of 300,000 mean unemployment isn’t worsening? Doesn’t 300,000 of new claims seem like more jobs are being lost?
Historically, there is always turnover and unemployment in the economy. Even when we had 4% unemployment, we witnessed initial claims around 300,000 per week. However, these folks tended to find jobs much faster. I find this number confuses people. It doesn’t really show if unemployment is rising or falling. We could have initial claims above 600,000 now, but if those who are already unemployed start finding jobs at a faster pace then unemployment could fall.
This is not happening though. Extended and emergency unemployment benefits are rising, which means folks are not finding jobs. We now have more people who have been unemployed for six months or more than we have had at any time in our nations history dating back to the 1940s.
Many economists are saying we will be back to 5% unemployment in 2011 or 2012. I doubt it. Mike Shedlock writes at Mish’s Global Economic Trend, and he had a great post about the headwinds unemployment faces this time around.
It is believed that unemployment is a lagging indicator, meaning the economy starts to grow before employment picks up, but with 17% of the workforce either unemployed or forced to work part-time, we probably won’t see robust, CONTINUED economic growth until jobs are created.