So, we are to be pleased that the initial claims are not as bad as they have been. We are to be happy with the fact that we are still over 450,000 each week, but better than the 700,000 we saw earlier in the year.
We are also told that it is good that only 5 million people are still receiving unemployment benefits. But, what is not in the headlines is the amount of people that have dropped from the roles due to running out of benefits.
Think about it for a second. We have a 10% unemployment rate (17% is we look at the real number) and only 5 million are getting benefits. Until we see a sustained pace of hiring, the fact that we see initial claims over 350,000 and continuing claims falling seems to add up to a whole heck of a lot of people that are losing jobs and losing benefits. It does not take a mathematician to figure that out.
Jobs will be the catalyst that brings an economy out of recessionary fears and reignites spending. It is a simple process and a very simple equation. Comments?
Initial claims for the week ended Dec. 19 dropped 28,000 to 452,000 (consensus 470,000) while continuing claims for the week ended Dec. 12 declined 127,000 to 5.076 million (consensus 5.170 million).
The 4-week moving averages for each series fell 5.8% and 2.4%, respectively, to 465,250 and 5.233 million.
The claims data are still a long way from pointing to a strong pickup in hiring, yet the trends are heading in the right direction. Clearly, the pace of job losses is abating, which should be seen as a hopeful sign by discouraged workers who have stopped searching for work.
Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.