 | Initial Jobless Claims Plummet |
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| Posted Under: Bullish • Employment |
Late last year, the consensus (and the media) started turning more bullish on the economy. We welcomed them aboard the less pessimistic train. But durable goods orders and retail sales were both weak in December. Then there were the Greek elections, rising fears of deflation and recession in Europe, a slowdown in China, and a few big-name companies reported weaker than expected profits. This all adds up to many of the "newly bullish" starting to doubt themselves.
They shouldn't.
Today we got a look at initial claims for unemployment insurance for the week ending January 24th. This is the closest thing we get to "real-time" economic data and we have found it to be a great leading indicator of the economy and labor market conditions. After a few weeks of rising claims, today's data (which is really from last week) dropped to 265,000, a decline of 43,000 from the prior week, and the best level since April 15, 2000. This is the lowest reading so far in this recovery or during the expansion in 2001-07.
Yes, Martin Luther King Jr. Day may have played some role, but the 4-week moving average is now 298,500. This is not the lowest we have seen this year, but it is down from 335,250 the same week a year ago (which also included the holiday). With initial jobless claims running under 300,000 per week, and remaining at very low historical levels compared to total employment, we see little evidence of any serious slowdown in the economy.
As a real-time indicator, we watch initial claims closely. So, even though there is evidence of global turmoil, the U.S. economy remains relatively healthy.
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