Ouch! Suddenly the new year looks a lot less inviting. New jobless claims surged higher last week by 36,000 to a total of 445,000 on a seasonally adjusted basis, the government reports. That’s the biggest weekly gain since last July and the jump pushes the total to its highest in 10 weeks. Quoting the immortal question of every shell-shocked solider through history: Wha’ happn’d?
One possibility is simply that the reported decline in new filings for unemployment benefits in late-2010 was a mirage, a statistical illusion, a joke imposed by the financial gods on mere mortals hoping for signs that the labor market was finally turning the proverbial corner. Then again, the optimistic view is that the number du jour is itself a quirk. Jobless claims, after all, are notoriously volatile. We still have the four-week average of new claims, which continues to trend down…for now, sort of.
But there’s no way to minimize the disappointment in today’s update. Once again we’re far above the psychologically important 400,000 mark. Been there, done that, and we’re set for another round apparently. The latest surge fuels suspicion that the holiday happenings of late-December delivered a temporary balm to the otherwise deep challenges that continue to afflict the labor market. But the party’s over…again.
Indeed, the many challenges in the labor market are still with us, and will be for some time. As we reported in yesterday’s edition of The Beta Investment Report, there’s no shortage of ongoing headwinds to keep optimism in check when it comes to thinking about jobs. The portion of the labor force that’s suffering from “long-term” unemployment—collecting benefits for 27 weeks or more—is at a record high (4% plus) since these records were started in the late-1940s. There’s also the falling rate of labor force participation, which dropped to 64.3% last month–the lowest since the early 1980s and therefore a sign that last month’s robust fall in the unemployment rate to 9.4% from 9.8% in November isn’t quite the good news it appears to be.
Of course, last week’s numbers for December payrolls was already casting dark shadows right out of the gate. Job growth is still modest, at best.
There’s enough forward momentum in the economy to keep a new recession at arm’s length, but growth isn’t going to be terribly impressive, particularly where it’s needed most, starting with job creation. Meantime, next week’s installment on jobless claims promises to garner lots of attention. Any guesses what the next number will be?