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Not
surprisingly, there was plenty of hoopla over today's larger-than-expected
drop in first-time applications for unemployment insurance compensation.
"U.S.
Jobless Claims Drop Points to Spending Gains" (Bloomberg)
Americans filed
the fewest claims for jobless benefits since 2008, surprising forecasters and
signaling that an improving labor market will give the world’s largest
economy a boost.
Claims dropped
by 13,000 in the week ended Feb. 11 to 348,000, less than the most optimistic
estimate of 45 economists surveyed by Bloomberg News. Other reports today
showed consumer confidence improved, housing starts climbed and manufacturing
in the Philadelphia area accelerated.
Stocks rose on
evidence that the U.S. expansion is gaining strength in the face of the
European crisis and a slowdown in China. The decline in claims for jobless
benefits coincides with a pickup in hiring that pushed the unemployment rate
down to a three-year low last month, giving consumers the confidence to
increase spending.
Unfortunately,
the initial claims data doesn't tell the whole story. While weekly tallies of
first-time applicants for unemployment benefits have drifted back towards the
lower end of their historical range, those figures do not include Americans
who have been out of work for more than a week. If you take the sum total of
initial, continuing, extended, and emergency claims -- which runs the gamut
of insurance programs for the unemployed - it remains more than 70% above the high end of the
range that prevailed during the past two-and-a-half decades.
So, while the number of newly unemployed workers is considerably less than it
was, the number of Americans who are jobless and
collecting benefits remains far above the levels that have been seen in the
past, including during periods when the U.S. has been in recession.
But as usual,
Wall Street must know better -- right? Otherwise, why else would they keep
buying stocks?
Michael J. Panzner
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