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JohnT
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Capitalist
Mar 1999
time: 00:31
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Jobless claims plunge
quote:
New claims for unemployment benefits fall to lowest level since January 2001, trouncing forecasts.
November 6, 2003: 8:39 AM EST
NEW YORK (CNN/Money) - Jobless claims plunged in the United States last week to their lowest level since January 2001, the government said Thursday, as the labor market continued its recovery from a long slump.
The Labor Department said 348,000 people filed new claims for unemployment benefits in the week ended Nov. 1, compared with a revised reading of 391,000 in the prior week.
It was the lowest number of weekly jobless claims since 339,000 in the week of Jan. 20, 2001. Economists, on average, expected 380,000 new claims, according to Briefing.com.
U.S. stock market futures were little changed after the report, pointing to a slightly negative opening on Wall Street. Treasury bond prices fell.
New claims had fluctuated in a narrow range near the 400,000 mark since mid-July. Most economists consider new claims below the 400,000 threshold as a sign of a recovery. Last week was the fifth consecutive week of jobless claims below that level and perhaps the clearest sign yet that the labor recovery is on the mend.
The four-week moving average of new claims, which irons out the volatility of the weekly data, fell to 380,000 in the week ended Nov. 1 from a revised 390,000 in the prior week.
Continued claims, the number of people out of work for a week or more, dipped to 3.51 million for the week ended Oct. 25, the latest data available, from a revised 3.53 million the prior week.
On Friday, the Labor Department reports on October's unemployment rate and the growth of non-farm payrolls. Economists, on average, expect unemployment to remain at 6.1 percent and for 65,000 new jobs to be added to payrolls, according to Briefing.com. |
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Sava
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GO GO GO!
Mar 2001
time: 23:31
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quote:
A Big Quarter
By PAUL KRUGMAN
he Commerce Department announces very good growth during the previous quarter. Many observers declare the economy's troubles over. And the administration's supporters claim that the economy's turnaround validates its policies.
That's what happened 18 months ago, when a preliminary estimate put first-quarter 2002 growth at 5.8 percent. That was later revised down to 5.0. More important, growth in the next quarter slumped to 1.3 percent, and we now know that the economy wasn't really on the mend: after that brief spurt, the nation proceeded to lose another 600,000 jobs.
The same story unfolded in the third quarter of 2002, when growth rose to 4 percent, and the economy actually gained 200,000 jobs. But growth slipped back down to 1.4 percent, and job losses resumed.
My purpose is not to denigrate the impressive estimated 7.2 percent growth rate for the third quarter of 2003. It is, rather, to stress the obvious: we've had our hopes dashed in the past, and it remains to be seen whether this is just another one-hit wonder.
The weakness of that spurt 18 months ago was obvious to those who bothered to look at it closely. Half the growth came simply because businesses, having drawn down their inventories in the previous quarter, had to ramp up production even though demand was growing slowly. This time around growth has a much better foundation: final demand — demand excluding changes in inventories — actually grew even faster than G.D.P. So it's unlikely that growth will drop off as sharply as it did back then.
But — you knew there would be a but — there are still some reasons to wonder whether the economy has really turned the corner.
First, while there was a significant pickup in business investment, the bulk of last quarter's growth came from a huge surge in consumer spending, with a further boost from housing. These components of spending stayed strong even when the economy was weak, so there shouldn't have been any pent-up demand. Yet housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) — which last year grew three times as fast as the economy — rose at an incredible 27 percent rate last quarter.
This can't go on — in the long run, consumer spending can't outpace the growth in consumer income. Stephen Roach of Morgan Stanley has suggested, plausibly, that much of last quarter's consumer splurge was "borrowed" from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later. If he's right, we'll see below-normal purchases and slower growth in the months ahead.
The big question, of course, is jobs. Despite all that growth in the third quarter, the number of jobs actually fell. And new claims for unemployment insurance, a leading indicator for the job market, still show no sign of a hiring boom. (By the way, for the last month there's been a peculiar pattern: each week, headlines declare that new claims fell from the previous week; a week later, the past week's number is revised upward, and the apparent decline disappears.)
And unless we start to see serious job growth — by which I mean increases in payroll employment of more than 200,000 a month — consumer spending will eventually slide, and bring growth down with it.
Still, it's possible that we really have reached a turning point. If so, does it validate the Bush economic program? Well, no.
Stimulating the economy in the short run is supposed to be easy, as long as you don't worry about how much debt you run up in the process. As William Gale of the Brookings Institution puts it, "Almost any tax cut or spending increase would succeed in boosting a sluggish economy if the Federal Reserve Board follows an accommodative monetary policy. . . . The key question is, therefore, not whether the proposals provide any short-term stimulus, but whether they are the most effective way to provide stimulus." Mr. Gale doesn't think the Bush tax cuts meet that criterion, and neither do I.
To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday's good news, that's a trick President Bush still seems likely to pull off.
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el freako
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Bristol, European Union
Oct 1999
time: 05:31
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The fall in jobless claims still doesn't alter the fact that total hours worked during this recession has fallen further and for longer than during any recession since 1929-33.
At this point (3 3/4 years after the peak) in the recessions of 1973-75, 1980-82 and 1990-91 total hours worked had recovered to it's peak level after falling by 3% to 4%.
This time round it has fallen by 6% and has only just bottomed out
Last edited by el freako on 06-11-2003 at 22:20
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Sava
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GO GO GO!
Mar 2001
time: 23:31
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quote:
Originally posted by rah
If you're not an economist, how do you know that he's smarter than you in that field? Or do you just assume he's smarter since he's voicing opinions that you like. |
I'm aware of Krugman and his credentials. Since the late 90's he's been the one of the only mainstream editorial economists whose been most accurate. You should read his book, "The Great Unraveling".
DanS: I apologize, you were right, I misinterpretted "businesses ramping up production" as restocking inventories. But nevertheless, production grew faster than demand, which suggests much less growth next quarter.
The point is people, this economy won't see true success until consumers have more money to spend. Cutting taxes and increasing deficits won't help if tuition costs, state taxes, local taxes, and health care costs rise. Consumer income isn't increasing beyond GDP growth, and as more people pile up credit debt and lose jobs, consumer spending will slow.
Sure, Democrats might scrap the tax cuts, or even raise the top marginal brackets, but the rewards of this are great for the economy. If working and middle class people receive tax credits for education, job training, home buying, and health care; they will have more disposable income to put into the economy. Our economy as a whole will be more productive.
As I've constantly been saying, this isn't a supply side problem, and supply side tactics won't help. In fact, they've been hurting the economy in conjunction with the loss of jobs and outsourcing to foreign countries. Outsourcing may cut the bottomline a little, but if Americans don't have jobs THEY CAN'T SPEND MONEY!
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06-11-2003 19:01
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