Continued improvement in the labor market

The economy may be struggling to grow and suffering from a huge output gap, but the labor market is undeniably improving, and in a relatively impressive fashion. First time claims for unemployment continue to decline, and by more than expected.

Claims as a percent of the workforce have fallen by almost half, and are now lower than at any time during the 1970-1997 period. That's impressive, and it's likely to continue to improve. The only thing missing, of course, if new jobs, but that should come with time and with improved fiscal and monetary policies.

As this chart suggests, the ongoing decline in weekly claims (shown inverted in the chart above) supports continued gains in equity prices. It's got to be a good thing that companies are firing fewer and fewer workers.