Initial claims for unemployment spiked to 399,000 last week a rise of 24,000. That brings them almost back to the key 400,000 level. Hopefully this was just a seasonal anomaly tied to the holidays, because on its face it is very bad news. Or at least it threatens to take away a very important part of the good news. Historically the 400,000 level has been the inflection point at which the economy starts to create enough jobs to make a substantial dent in the unemployment rate. The week to week number can be volatile, so looking at the four week moving average makes sense to not over react to a single weeks numbers. The four week average rose by 7,750 to 381,570. It is still well below the 400,000 level, but the big increase is not very comforting.
The news on regular continuing claims was also on the weak side, with a rise of 19,000 on the week to 3.628 million. However over the last year they are down by 318,000. The regular claims are paid by the States and only last for 26 weeks. After that people move to Federally paid extended claims, which currently can bring the total time getting benefits up to 99 weeks. There the news was a bit better with a drop of 48,000 on the week to 3.455 million. Over the last year they are down by 1.192 million.
The total number of people getting benefits is now 7.333 million, up 111,000 on the week but down 1.862 million over the last year. What is not clear is how many of those 1.862 million left through the door to prosperity, a new job, and how many left through the door to poverty, the extended benefits simply running out.
Overall, it was a very weak report this week. These numbers are sometimes flakey around the holidays, so it is not a reason to panic, but it is a reason for concern, especially if the trend does not head back down iver the next few weeks.
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