For the past couple of Fridays (12/9 and 12/16) I’ve described how first-time unemployment claims have dropped from the preceding week (and stayed below the 400,000 mark that economists feel is the threshold between reducing unemployment below, and increasing unemployment above that boundary). Well, this week it’s become a “hat trick” of sorts, as a third week of downward movement has been registered by the US Department of Labor. This time, however, the down-tick is pretty slight — only 4,000 to 364,000 total claims filed — but the four week-average of such claims has fallen by 8,000 to just over 380,000, and is the lowest number registered since June of 2008. And this week’s current initial claims number is the lowest since April of 2008, so we are indeed groping our way back to where we were before the crisis kicked into gear in December of 2007.
The underlying story here, we think, is that businesses were braced in the fall for a weakening in demand — implied by plunging consumer confidence — which did not then happen. Robust sales growth has therefore left many firms in a better position than they expected, so layoffs are falling. Other things equal, the drop in claims in recent weeks, if sustained, is consistent with private payrolls growth ramping up to about [200,000] per month.
This is still not robust enough growth to whittle away at current unemployment levels quickly, but it is enough growth to bring them down over something less than the decade of agonizingly slow improvements that economists were seeing in the numbers as recently as one month ago. And while improvements still remain sluggish, they are continuing unabated and are finally producing some signs of optimism and improving overall prospects. Hard to imagine a better present for battered consumer and commercial confidence or a better harbinger for 2012. Let’s hope this trend continues to pan out!