New jobless claims fell last week, but the drop doesn’t look all that convincing. It’s been clear for some time that filings for unemployment benefits have been trending higher, and for a fundamental reason: the economy has slowed. The surge in new claims back in the spring warned of no less, when the consensus outlook for the economy was still relatively bubbly. Once again, claims have proven their value as a forward-looking indicator. Alas, the current forecast in these numbers isn’t encouraging. In sum, it’s going to take a lot more than one modest down week to persuade the crowd that this series has returned to a virtuous cycle.

With that nasty thought out of the way, we can digest the number du jour in the proper context. Initial claims slipped last week by 9,000 to a seasonally adjusted 432,000. The four-week moving average, however, inched higher for the fifth week in a row. That’s bad enough, but it’s even worse when you consider that claims are at elevated levels. And without an obvious catalyst for changing the momentum, it’s hard to see how we get out of this trap anytime soon.

If you’re looking to see the glass half full, the unadjusted annual pace of new jobless claims offers some respite. Claims by this measure fell 8.4% last week vs. a year ago. Sure, it could be the start of something positive, but the trend still looks worrisome and so we’ll need to see many more weeks of declines. Don’t count on it. Anything’s possible, but not everything’s likely.

“The labor market has been quite weak and employment growth has been quite soft,” Conrad DeQuadros, senior economist at RDQ Economics, tells Bloomberg. “It’s hard to imagine we’re going to get the kind of employment growth we would need to see to get the jobless rate to come down significantly.”
Is there anything in today’s jobless claims update to encourage a change of thinking? Not really. At best, we’re caught in a funk in the labor market. Let’s be optimistic and go with that thought. Ok, but even that relative bit of optimism is getting tougher to rationalize.
It’s still reasonable to expect that the U.S. will avoid a recession, which is to say a contraction in GDP. But sidestepping the grim reaper of macro promises (threatens) to be most unsatisfying this time. The recovery has stalled, but it hasn’t stopped, at least not yet. It’s an anemic expansion, but even that’s not the biggest problem. Rather, the worry is that the feeble growth will roll on for the foreseeable future. Unfortunately, today’s jobless claims numbers don’t offer any reason to think otherwise.