Applications for unemployment benefits fell more than forecast last week — to the lowest level since July 2008. This suggests that labor markets are beginning to heal.

Stock market futures rallied on the news.

Ian Sheperdson of High Frequency Economics notes an intriguing rule of thumb: Each 10,000 drop in Weekly Jobless Claims sustained for a month is consistent with payroll growth rising by 25,000.

Here’s Bloomberg:

“Jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20, Labor Department figures showed today in Washington. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The total number of people receiving unemployment insurance decreased to the lowest in two years, and those on extended payments also fell.

Fewer firings lay the groundwork for a pickup in job creation that will generate incomes and spur consumer spending, which accounts for 70 percent of the economy. Even with companies firing fewer workers, unemployment will be slow to decline, according to the Federal Reserve’s latest forecast in which policy makers also lowered their growth projections.”

I do not believe “consumer spending” still accounts for 70% of the economy — its slipped a number of basis points.

Whether being such a consumerist, debt-laden society is good for our long term happiness and well being is another discussion entirely . . .


U.S. Jobless Claims Decline to Lowest Since July 2008
Shobhana Chandra
Bloomberg, Nov. 24 2010

Category: Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

23 Responses to “Jobless Claims: Lowest Levels Since July 2008”

  1. dead hobo says:

    BR nannied us by fretting:

    Whether being such a consumerist, debt-laden society is good for our long term happiness and well being is another discussion entirely . . .

    How dare you claim that people shouldn’t spend their own money on whatever they please AND how dare you state that companies shouldn’t lend as a business to people who have the ability to repay the loan even if they want to spend the loan on crap. People should never be prevented from borrowing as much as they want, providing they aren’t inflicted with OCD and have a spending sickness (few people do) Screw your nannified bullshit.

    People are as smart as they need to be, at least on most days. While this is a low standard, it’s still a free society and that’s the only bar it has to meet. Even when people go bust, it’s more of a lifestyle blow than a life threating event. So someone might have to rent rather than own if life doesn’t work out as planned. OK. This does not bother me. Homelessness and living on the street would, but there seems to be a scarcity of that. The only time I should care about someone else’s excesses is if I might have to clean up their mess. Please take that nanny crap somewhere else.

  2. DeDude says:

    The big picture actually does not change that much whether our GDP is 70& or 65% consumer spending. But I agree that the idea of consumption as the main goal is worth a debate. One of the reasons Europe has had a slower GDP growth than US is that they have decided to use their increased productivity to give people less work and more free time. We used our increased productivity to give people more stuff. As manufacturing becomes more and more automated there just wont be that much work around. So eventually we either cut total number of hours worked in a lifetime for everybody, or we accept that a sizable group of people will live their lives in a constant struggle. Currently we are transferring about 1/3 of the fruit of productive peoples work to the small rentier class of Wall Street operators. If we could find a way to ensure that most of that wealth got distributed to those producing it, the working class people could easily cut total lifetime work-hours by 30% and all un-/under-employment would disappear.

  3. DeDude says:

    Dead hobo@9:48

    Your personal freedom ends where it begins to hurt somebody else. If you take a huge chunk of say 60 work hours per week out of the limited number of work hours in our society, then someone else will be left without work, and therefore with no way to make a comfortable life. So your selfish drive for indulging in materialistic wealth will directly have hurt someone else. That most certainly is something the “adult supervision” state should crack down on!

  4. foxorrabbit says:

    Not to sound like a perma-bear — I’m not asking this to make a veiled bearish statement, I am legitimately curious about it — but how do they account for or adjust for how many people have already become unemployed? e.g. a hypothetical extreme: if 100% of the workforce lost their jobs and filed claims in month 1, then in months 2-12 new claims would be zero. My point is, are there fewer and fewer people who are even eligible to be included in first-time jobless claims numbers (even if “fewer and fewer” just means 110 million instead of 120)? I guess it would still appear in U6 (state vs. flow) though.

  5. daf48 says:

    dead hobo

    How dare you say that “People should…. Don’t tell me what people should do. What the hell do you know anyway?

  6. curbyourrisk says:

    You can only let go so many workers. Eventually you have none left to let go. I am not impressed by the number of first time filers or applications. I am more concerned with the ACTUAL number of people out of work…that includes all those people who have fallen off the rolls and are no longer counted. The only employment figure that matters is the U6 figure. Until that improve dramatically, please stop arguing that this figure is somehow positive. By the way, did you get a look at the housing data this morning? I am sure you can find a way to spin that positive as well.

  7. curbyourrisk says:

    Daf: I dare you to defy listening to me.


    Go ahead…I dare you to defy me.

    haha…Happy Thanksgiving to all.

  8. carleric says:

    Gee, I wonder if Xmas retail temporary hiring had anything to do with the unemployment stats? You think?

  9. Mannwich says:

    Exactly curb. It’s somewhat interesting (and irritating) that BR touts various stats the confirm his views/biases of the market and economy. I guess if all’s well on the North Shore of Long Island and NYC, then all is well everywhere in the nation. Sigh. New found fame and fortune definitely affects one’s viewpoints. Unavoidable, I guess.

  10. tradeking13 says:

    The 70% number is for Personal Consumption Expenditures (PCE) which includes spending for Medicare, Medicaid, and health insurance, not to mention foreign produced goods/services.

    According to this article, Get It Straight: Consumer Spending is *not* 70% of GDP, “the money that people actually pull out of their paychecks and bank accounts to pay for domestically-produced goods and services drives about 40% of economic activity in this country.”

  11. Bruman says:

    This data point surprised me, but I’m very happy if all that it implies is true.

    I’ll wait for payrolls to confirm my optimism though. It’s one thing for fewer people to be fired; it’s another thing to actually start reducing the number of people who are out of work.

    And even when people are rehired, we need to be concerned about whether those jobs are better or worse than the jobs that they left (in terms of skills and in terms of income).

    But it’s still a hopeful sign in a noisy signal.

  12. microcap says:

    BR– as our designated government statistic data diver, I have the following question: I understand the seasonally adjusted versus NSA concept etc.

    Is there any data that shows SPECIFICALLY the week before Thanksgiving over the years, and whether there is a consistent revision afterwards one way or another? Also, Thanksgiving is a bit earlier this year, does that matter?

    Thanks and have a great holiday!

  13. DeDude says:


    Yes consumer spending on health care is part of personal consumption. And when the consumers don’t have a lot of income they cut down on that consumption so it’s still all (or 70%) about the consumer class. The only realistic way to make sure GDP is growing, is to make sure we have a strong consumer class. Our current policy of raping the consumer class to give huge sums to the rentier class is a sure way to stagnate and fall even quicker behind China in growth (and eventually in absolute wealth).

  14. notakid says:

    If we ran this same set of numbers for 10 years it would not mean a thing.

    The only thing that matters is tax rev, if you have a country of temps working for 10.00 bucks and hour it really isn’t going to matter what the number working is.

    Little hope for this to change for the better for YEARS.

    Wake me when we are adding 400K well paying jobs a month for a year or two that are being generated by small biz in this country.

  15. Jojo says:

    Excerpt from Bloomberg article:

    Effect of Holidays

    Claims typically increase during the period between the Veterans Day and Thanksgiving holidays, and the Labor Department’s seasonal adjustment process takes that into account. During the latest week, fewer Americans than usual filed claims, a Labor Department spokesman said as the figures were released, allowing seasonally adjusted filings to decrease more than forecast.

    Additionally, less than 50% of workers are typically eligible to file for for unemployment benefits. Contractors, self-employed workers and people who have not worked enough weeks are ineligible to file for benefits.

    So after applying seasonal adjustments to less than 50% of the workforce, one might question the validity of this metric and whether it is anything to get excited about.

  16. [...] claims continue to trend lower.  (Bloomberg, Calculated Risk, Big Picture, [...]

  17. BobCarver says:

    The seasonal adjustment adds claims until mid-October, then increasingly subtracts them. And, it’s a big adjustment. In the latest reporting week, jobless claims actually rose by +52,490. In other words, the government reduced the actual number of claims by a whopping -86.490, or a fudge factor of -18.7%!

  18. Captain Jack says:

    Via Mish, quoting Bloomberg:

    Claims typically increase during the period between the Veterans Day and Thanksgiving holidays, and the Labor Department’s seasonal adjustment process takes that into account. During the latest week, fewer Americans than usual filed claims, a Labor Department spokesman said as the figures were released, allowing seasonally adjusted filings to decrease more than forecast.

    Mish comment: “Retailers have been ramping up with temporary holiday hiring at the fastest clip in years. Whether that translates into long-term employment remains to be seen. Seasonal adjustments have been unusually large recently, for reasons not explained by the BLS.”

    So some guys slant the bull side, others slant the bear side — everyone talking their book. Objective analysis? Fuhgedaboudit.

    At moment I’m most curious about the potential effects of a sluggish-but-sustainable recovery meme taking hold… and the potential compression effects on the stimulus-juiced “paper vs real” spread… bad news has been good news for Fed largesse recipients for close to 2 years now. So what’s that mean when modestly good news shows up?

  19. Thor says:

    CJ – Mish has been picking those numbers apart for years now. Even if we had a +400K number, he’d find a way to say we actually lost 400K. I agree, he’s just talking his book, which in his case has been “the world is ending tomorrow and everyone who disagrees with me is an idiot or a perma bull, or a greedy anti-american Public Employee Union member”

  20. MayorQuimby says:


    We HAVE been losing 400K plus each report! And while I’m an admitted perma-bear, show me anything Mish has reported on that is off-base? Unions ARE leeching off the public. They DO need to confronted. Markets ARE overvalued and the underlying economy IS in terrible shape. So….

    Bears have been correct for a very lone time imo. But PSX is up so they’re incorrect? Puhleeze. Go buy some overpriced GOOG if you like. When I see a sale, I spend money. When I see insanity, I save it.

    I will leave you with this one last bit of insight – I will lay heavy odds that the very day we start getting some REALLY good economic reports – and it REALLY honestly looks like we’re gonna make it – that day we make our major top and then roll over.

    At any rate – it’s all nonsense anyways. The days of sitting on one’s rear and actually enjoying the fruits of someone else’s labor are coming to a (temporary of course) end. Enjoy the dividends while they’re coming in. Reality’s right around the corner.

  21. chromex says:

    It is difficult to read BR’s philosophical inquiry into social direction ( does this really bring happiness to us to be a consumer society?) into a suggestion for some sort of command and control outcome. Even assuming such an inquiry CAN be read as such a suggestion, since I am assuming Mr. no nanny state supports laws against murder, the real philosophical question then becomes “where is the line drawn?”, not, “how dare such a topic even be broached?”

  22. cognos says:

    This is what recovery look like.

    There are actually some fools above who think this is “-400k” and they are waiting for “+400k”.