Good News: Jobless Claims Drop

We should all acknowledge that today’s report is good news. New claims for unemployment assistance dropped again, to 368,000, which is 20,000 lower than last week. This is the best level they have been since may 2008. Better yet, the four week average is also down to mid-2008 levels at 388,500, which tells us that today’s report is not an aberration.

Claims have now dropped about 25% since last summer, and when we couple that advance with the modest rise in hiring and the reduction in layoffs, we can see the labor market has improved substantially.

Phew.

But.

Not enough. The crisis has left us with an enormous residue of damage yet to be cleared up. And the most obvious aspect of that damage remains the painful level of unemployment, especially long term unemployment.

We will get a better look at the job market tomorrow when the government reports it numbers, but earlier this week ADP reported that private payrolls gained 217,000 jobs last month. There has been a bit of a divergence between the ADP and government figures recently, largely because ADP counts payroll numbers and not those who were paid. If you are on a payroll somewhere, but received no wage, ADP reports you as employed. The government reports only those who get a wage. Apparently businesses are keeping people on their payroll lists and not paying them. Thus the difference between the two data series.

Setting that kind of statistical quirk aside, the numbers are improving. Nowhere near enough. But let’s bask in the glow for at least a day.