Thursday, October 22, 2009

Continuing jobless claims continue to slowly improve

This week's report on new unemployment claims follows the trend in place since last March: slow, irregular improvement. Since that is getting boring to follow, I thought I would show this chart, which represents the number of individuals who are unemployed and are receiving unemployment benefits (and who filed for benefits at least two weeks ago). This also shows slow, irregular improvement. Things are getting better, but it will take many more months yet before anyone can claim that the economy has fully recovered.

The economy is recovering, but it is facing stiff headwinds. One source of the headwinds is the government's own "stimulus" spending, since it was non-stimulative in nature (i.e., mainly transfer payments, plus modest infrastructure spending stretched out over many years), and it threatens to result in a significant rise in tax burdens. This puts a damper on "animal spirits," in addition to absorbing a lot of the economy's savings which could otherwise have been put to better use.

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