The jury’s still out on when the recession will end, but the case for arguing that the pace of economic contraction is slowing got another boost this morning with the weekly update on initial jobless claims.
For the week through May 16, new filings for unemployment benefits dropped by 12,000 to 631,000, the Labor Department reports. That’s a clear signal that the recessionary winds are still blowing hard. But as we’ve been arguing for several months, including here, a topping out in new reported claims may signal the negative economic momentum is ebbing. Today’s update continues to suggest that we’re at or near the trough of the recession. Or, if you’re an optimist, you might think that the trough came a month or two back.
The reasoning for considering jobless claims as an early clue of the general economic trend is suggested by the historical record, as we explained here. By that standard, today’s numbers lend a bit more confidence that the downturn’s low point has arrived, or perhaps just passed. But keep in mind that even if that’s true, that leaves plenty of recessionary months ahead before growth returns.