(St. Louis Federal Reserve)
The holiday season, as previously noted, is a good time to be wary of the meaning of first-time applications for unemployment benefits. But today's announcement from the Department of Labor of yet another seasonally adjusted drop in claims extends a downward trend another week. The first-time claims fell to 364,000 from an upwardly revised 368,000 last week.
What seems to be the most used word in announcements these days of economic statistics—"unexpectedly"—was again attached to the drop because the consensus of analysts surveyed by Bloomberg and The Wall Street Journal was for an upward move. The four-week running average of first-time claims that economists prefer because it flattens volatility in the weekly numbers also fell—to 380,250. Continuing claims for regular benefits dropped to 3.55 million. But that number does not include Americans receiving extended benefits, which adds another 3.6 million to the rolls.
The trend would normally be taken as a strengthening of a labor market that has been stuck at high levels of joblessness for three-and-a-half years.
But another statistic released by the Commerce Department this morning indicates a weaker economy than was previously thought. The second and final revision for growth in annualized gross domestic product for the third quarter clocked in at 1.8 percent. That number, too, was "unexpected" because the expert consensus had said it would remain steady at the 2 percent announced in November when the first revision was made. The original estimate, in October, was 2.5 percent.
The latest number is based on more complete data than was available when the estimate was made in October, and when the first revision to 2.0 percent was made in November. The GDP figure compares with 1.3 percent in the second quarter and a miserable 0.4 percent in the first quarter. The latest revision was mostly accounted for by a smaller drop in inventory and lower levels of personal consumption than previously thought. One good sign in the GDP numbers came in inflation-adjusted final sales of domestic product—GDP less change in private inventories. These increased 3.2 percent in the third quarter, compared with an increase of 1.6 percent in the second. The estimate of final sales last month was 3.6 percent.
Although the figures are clearly better than two-and-a-half years ago when GDP seemed to be in free fall, the sluggish growth is one more sign that the recovery is extremely weak compared with past recoveries after recessions. Some critics argue that with the still high unemployment numbers, the weak GDP growth makes a mockery of the word "recovery."
Economists generally agree that when 4th quarter GDP figures are released, they will show considerable improvement. Which is what they said for the third quarter.