Thursday, December 15, 2011
The news from the weekly unemployment claims front just keeps getting better, as claims for the recent week came in substantially below expectations (366K vs 390K). Claims are very timely data, and they paint a picture of a jobs market that has been improving almost continuously for the past two years. There is absolutely no sign here of the double-dip recession that ECRI insists is imminent, because a sustained rise in seasonally adjusted claims has marked the beginning of every recession in the past 40 years.
On a seasonally adjusted basis, declining claims at this time of the year means that layoffs are not rising as much as they have in prior years. Layoffs typically rise beginning in October and reaching a peak in early January. This year they have also risen, but by much less than they would have in a typical year. This means that businesses have really gotten lean and mean—minimizing seasonal hiring and relying more on working existing employees harder, and that is one reason corporate profits continue to impress. This also means that as the economy continues to pick up, it becomes more likely that the pace of hiring will not only continue at its recent 1.5% annual pace, but increase and gradually bring down the unemployment rate. Nothing is likely to happen fast, however, so I doubt there will be substantial improvement before next year's elections, which means that a sluggish and disappointing recovery is almost certainly going to be one of the election's major themes.
Posted by Scott Grannis at 8:41 AM