Remember this headline two weeks ago:
Jobless claims tumbled to 391,000 from 428,000, an unusually big drop that comes completely out of nowhere. …
We’ll see how well it holds up — the Labor Department says the big drop was affected by technical issues — but it could be kind of a big deal to see claims get and stay below 400,000
Then last week, the media were just silent about the fact that jobless claims were back up above 400,000 (401,000):
Jobless claims popped back above 400,000, to 401,000 after last week’s surprising drop in the numbers. Still, it was better than the 410,000 that Wall Street economists were expecting. Stock futures are up just a bit
We can maybe be relieved that weekly jobless claims are “only” at 404,000, and not at the 650,000 peak they hit during the crisis or the 450,000 level they spiked to this spring.
But we cannot call this a good number.
History offers one reason we can’t call this a good number, as Dan Greenhaus at BTIG notes:
In November 2003, two years after the recession ended in 2001, initial jobless claims hit 354K. Two years after the recession ended in March 1991, initial jobless claims hit a 338K level. There is considerable work to do on the labor front and with the expiration of extended unemployment compensation set to occur at the end of this year, it seems likely that the debate over “jobs” isn’t going away any time soon.
I wonder why this fact wasn’t mentioned before. These guys are desperate to seize on any “good news” and proclaim this is the trend. Not so. Yes, we have a lot of work to do on the labor front, and that is mainly to allow the deleveraging process to continue unimpeded and encourage the formation of real capital.