Fewer Americans are filing first-time applications for unemployment as it now appears that the slowdown in firing may be turning around and new jobs are now being created. The U.S. Department of Labor announced that claims for jobless benefits dropped by 14,000 to 351,000 reaching levels last seen in 2008. The four-week moving average remained at 355,750, the same as the previous reading. The four-week moving average is considered a more stable measure of jobless claims and its steady level reveals what may be a trend in fewer people joining the ranks of the unemployed. The unemployment rate continues at 8.3 percent which is a three-year low and may even dip below the 8 percent level by the end of 2012. Economists warn that last year at this time we saw a drop in jobless claims, only to see an increase during the middle six months of the year and then a gradual decline in claims late in 2011. Bloomberg commented that the decrease in jobless claims coincides with “improving consumer confidence which according to Bloomberg rose from minus 33.7 to minus 36.7.”
It’s Looking Better All The Time
The claims figure has been dropping since last October and now stands 14 percent lower than just six months ago. The total number of claims stands at 7,424,000 a decrease of 36,392 from the week earlier. Two groups that are still experiencing an increase in initial claims are former Federal civilian employees and newly discharged military veterans. The number of former Federal employees filing claims for benefits increased to 1,302 and the number of newly discharged veterans climbed 19 percent to 2,713. The five states with the highest initial claim rates were; Alaska, Rhode Island, Pennsylvania, Montana and Idaho. The five states with the largest increase in the number of initial claims for benefits were; New York, California, Pennsylvania, Texas and Virginia. The primary reasons given for claims were layoffs in transportation, education services and food services. Two states reported more layoffs in the construction industry and manufacturing sector. Those states that reported a decline in jobless claims indicated that they experienced fewer layoffs in business services, transportation, food service and retail.
Rising Costs May Erode Job Gains
One area of concern that economists remain focused on is inflation. Specifically, the rapidly rising cost of gasoline which may, if it continues to increase, cut into employment gains being made. The national average price of a gallon of gas rose to $3.82 according to the AAA daily fuel gauge report, which is 30 cents a gallon higher than one month ago. This metric has boosted overall wholesale prices which increased 0.4 percent last month. The index has climbed 3.3 percent in the past 12 months, which represents the smallest gain since 2010. One side-benefit to modest inflation is that the Federal Reserve is more likely to keep interest rates lower for a longer period of time. The Fed recently announced that they now expect to keep short-term rates near zero until 2014.
What’s Good For The Stock Market Is Good For America?
The S&P 500 closed above 1400 for the first time in four years and has rocketed ahead by 12 percent in 2012 alone. The Dow closed above 13,000 and appears to be steady even as the nation’s banks struggle to pass the Fed’s stress tests so that they can pay their shareholders more dividends or buyback “cheap” stock. Consumers may begin to feel confident again as the job market improves, fuel costs moderate and the election year cycle gives some hope that our elected officials are actually paying attention to what’s going on in the country. The economy needs many more months of improved jobless claims and new hiring, but the past several months offer a glimmer of hope that we may finally be on the right track.