After a rocky period in February, the downtrend in initial jobless claims seems to be back on track, as today’s
update suggests. Are we setting ourselves up for disappointment? Perhaps not, although tomorrow’s monthly report on nonfarm payrolls will shed some light on whether we’re being fooled again.

Meantime, the Labor Department reports today that new filings for unemployment benefits slipped by 6,000 to settle at 439,000. That matches the tally for the week through February 6. Indeed, those twin dips represent the lowest points since jobless claims peaked at a high of 651,000 back in late March of 2009. It’s been (mostly) downhill ever since, albeit with some bumps along the way, including February’s temporary surge.

As encouraging as the latest report is, the same old problem continues to lurk: signs of net job growth are MIA. A decline in the numbers of newly unemployed is critical, albeit less so as the weeks and months pass by. The key period for this data series as a window on the future has passed.
The sharp decline in newly unemployed over the past year has been a powerful clue that the economy would soon stop contracting. That’s almost certainly the case, and we expect that the National Bureau of Economic Research will eventually declare the Great Recession’s end as sometime in the second half of 2009. That’s easy to say now, of course. An early clue was the persistent decline last year in initial jobless claims.
But that’s old news. We know that the economy is no longer in danger of a death spiral. That’s been a topical point of discussion for much of the past six months or so. The elephant in the room remains the debate about when net job creation will commence. In other words, the burning question is when the news for the labor market is positive. That’s separate and distinct from learning that the news is less negative. In search of an answer, we await tomorrow’s employment report.