The holidays are never the best time to make predictions about the future of the labor market based on unemployment benefits claims. Seasonality of the data makes it tough to get a really good read. But today's
sharp drop in first-time unemployment claims is nevertheless good news. Together with other recent positive news, it's a sign of a possible real breakthrough on the jobs front.
The question now is whether the trend will hold into the new year. Problems in Europe and the slowdown of the Asian economies could have a large impact. Whatever the case, the numbers here need to be looked at against the backdrop of millions who are still out of work and who have exhausted their benefits if they had any to begin with.
The Department of Labor reported the first-time applications for unemployment benefits fell 19,000 to a seasonally adjusted 366,000, the lowest level since May 2008 early in the Great Recession. The four-week running average, which flattens volatility in the weekly figures, fell to 387,750.
While the four-week average of continuing claims in the regular program also fell slightly, the total number of people claiming benefits in the regular and extended benefits programs for the week ending Nov. 26 was 7.4 million, an increase of 874,670 from the previous week.
In the past, 400,000 first-time claims each week was considered by many to be the "tipping point" for job growth after a recession. That is, once the number of first-time claims reached the 400,000 mark, it was a sign that the economy would start generating jobs again instead of shedding them. But job growth actually began climbing, albeit modestly, well before first-time claims fell to that level. Now, some economists say 350,000 is the level at which sustained job growth begins. But, in fact, making bets on this moving target is a crap-shoot. Nobody knows.
