Good News Redux
For the second week in a row, the standout piece of good economic news is the decline in the number of Americans filing for their first week of unemployment benefits. Initial jobless claims, seasonally adjusted, fell sharply to 366,000 for the week ending December 10, down by 19,000 from the prior week. It is the lowest level since May 31, 2008. The four-week moving average, which smooths out the noise in the weekly data, fell to 387,750, the lowest since July 12, 2008. Readings below 400,000 generally indicate that the labor market is expanding. The two-week plunge in weekly claims suggests that the sharp drop in the unemployment rate last month from 9.0 to 8.6 percent was not a fluke. Granted, the weekly claims data are volatile especially around the holidays. Moreover, the unemployment rate and the number of long-term unemployed in the U.S. – 5.7 million who have been without work 27 weeks or longer – remain far too high. But recent trends in the data suggest the labor market is starting to shake off its multi-year torpor.
More good news: inflation as measured by the consumer price index remains in check – unchanged in November on the heels of a 0.1 percent drop in October. Year-over-year rates remain a bit high at 3.4 percent overall and 2.2 percent excluding the volatile food and energy categories (a concept called core inflation). Inflation is expected to subside in the months ahead.
Have a great weekend.
SVP, Chief Economist
Grubb & Ellis
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