New filings for jobless benefits jumped by 18,000 last week to a seasonally adjusted 460,000. Weekly numbers for this series are notoriously volatile, but the trend so far this year is distinctly unimpressive. Measured from the week through this past January 2, initial claims have generally moved sideways this year through last week. That’s in contrast to the strong downside trend that prevailed for most of last year.
A month ago, we considered the possibility that the trend in new jobless claims had stalled. Looking at today’s numbers offers no obvious reason for dismissing that concern. Nonetheless, hope still has the upper hand, according to one dismal scientist quoted in today’s news reports. “The trend [for initial jobless claims] is still down,” Jonathan Basile, an economist at Credit Suisse, tells Bloomberg News. “I would look for continued gradual improvement as we go forward.”
Perhaps, although it takes an extra dose of faith today in thinking so. How might we muster extra faith? We can start by looking at weekly continuing jobless claims. Although this number is reported with a weekly lag relative to initial claims, today’s continuing claims news is encouraging. As our second chart below shows, continuing claims dropped to 4.55 million for the week through March 27. That’s a relatively steep drop by recent standards, bringing the total to the lowest level since December 2008.
Good news, to be sure. But continuing claims are still quite high—too high to assume that the labor market is in full-bore recovery. And as the latest uptick in initial claims suggests, job creation is still touch and go at this point. The healing process has begun, but the numbers strongly suggest that the mending will be long and slow, and subject to setbacks.
As Fed Chairman Ben Bernanke said yesterday, “We are far from being out of the woods. Many Americans are still grappling with unemployment or foreclosure or both.” Hiring is still “very weak.” Arguing otherwise with convincing statistical support is going to take months, perhaps well into next year. The best we can say for sure at this point is that it’s not getting worse in terms of the labor market. But that news is less satisfying with each passing week.