A Worrisome Rise in Jobless Claims

The odds that the economy has fallen into a spring slowdown – for the third straight year – rose this morning.

DAVID LEONHARDT

Thoughts on the economic scene.

The number of people who filed new claims for jobless benefits held roughly steady last week, according to the seasonally adjusted numbers released by the Labor Department today. The report was bad news because it suggested that the rise in claims over previous weeks might not have been, as some optimists hoped, a statistical fluke caused by the timing of Easter.

Last week, 388,000 people filed an initial claim for unemployment insurance (again, according to the seasonally adjusted numbers, which is why the timing of holidays matters). That number was largely unchanged from 389,000 the prior week and 388,000 the week before. Three weeks earlier, though, only 362,000 people filed initial claims, which seemed to be a sign that the labor market was continuing to improve.

The weekly jobless-claims statistics are notoriously volatile. But three straight weeks of elevated claims suggests that job growth in April may have been as disappointingly modest as March’s job growth had been, following much better numbers in late 2011 and early this year.

As Annie Lowrey wrote in The Times last week:

Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring.

In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined….

A third straight year of economic disappointment could have major political implications, hurting President Obama’s re-election campaign and helping Mitt Romney, the likely Republican nominee, make the case against Mr. Obama.

Some optimists, like Ian Shepherdson of High Frequency Economics, still think that the rise in jobless claims and other numbers is more of a blip than a real trend. As last week’s article in The Times noted, “The slowdown in part reflects an unusually warm winter, which pulled forward economic activity, making January and February seem artificially good and perhaps making recent weeks look worse than they truly were.”

Mr. Shepherdson said on Twitter Thursday morning that next week’s number of jobless claims would be the true test of how large the Easter effect had been and whether the recent trend was real.

Next week will also bring a new monthly report on jobs, which is far broader than the weekly jobless-claims reports, because the monthly report covers every aspect of the job market, including hiring and firing. (The April jobs report will also be a better measure than Friday’s report on gross domestic report, which covers only the first three months of the year.)

The last monthly jobs report showed that the economy added only 120,000 jobs in March, down from an average of more than 240,000 jobs a month in the previous three months.

Source & Image : New York Times