Unemployment Claims at Lowest Point Since 2008

After spiking last spring, unemployment claims have been declining, reaching their lowest point last week since April 2008.

The report this morning from the U.S. Department of Labor says 364,000 initial claims for unemployment benefits were filed last week, a decrease of 4,000 from the week before and 59,000 fewer than the same week last year. It’s the third consecutive weekly drop. (Numbers are seasonally adjusted.)

A Reuters poll of economists in advance of this morning’s release predicted the number of new claims would rise to 375,000. The lower-than-expected number helped get stocks off to a strong start this morning despite a Commerce Department report that the third quarter GDP grew at a revised 1.8 percent rate. Previously, the rate had been estimated at 2 percent. Economists were expecting the 2 percent growth rate to stand.

However, there were other positive economic reports. The Thomson Reuters University of Michigan consumer sentiment rose to 69.9 points in December from November’s 64.1, besting expectations it would only reach 68. The index is derived from monthly surveys of consumers nationwide.

The report noted that, “Good times economically were expected in 2012 by 29 percent (of consumers) in December, up from 19 percent in November and the recent low of 14 percent in August. While more consumers heard news of employment gains in December, they didn’t expect that those gains would have much impact on the national unemployment rate in the months ahead.”

However, the survey measures were below last year’s levels and consumers reported being worried about their personal finances. That prompted surveys chief economist Richard Curtin to warn, “If the payroll tax holiday is not extended, it would be a significant drag on economic growth, and would increase the likelihood that weakness in consumer spending would again put the economy at risk of a renewed downturn.”

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With Congress stalemated over extending the payroll tax cut, business associations are warning that hiring plans are beginning to be put on hold. The International Franchise Association said this week that failing to extend the cut will “jeopardize the creation of 168,000 new jobs” next year.

If there’s no action by the end of the year, workers will see fewer dollars in their first paychecks of 2012, at just the time bills for their holiday shopping begin to roll in. For workers earning $50,000 annually, it would mean about $19 a week less take home pay.

Much of the attention has been focused on the impact of ending the 2 percent savings on Social Security taxes that has been in effect for a year; without a break in the impasse, some 2.6 million Americans could lose their unemployment benefits. CNN/Money says that by mid-January, nearly 700,000 would lose benefits, which average $300 weekly. By March 3, the number rises to 2.6 million, according to White House estimates.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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3 Comments on “Unemployment Claims at Lowest Point Since 2008

  1. This is good news.
    On a related front, it seems the only kind of *tax cut that the House Republicans DON’T want is a job-creating one that affects 160,000,000 ordinary Americans. Go Tea Partiers!

    Cheers,

    Keith Halperin

    *BTW, there’s no way to get our long-term fiscal house in order without higher taxes as boomers age. Also, I’ve heard we could have afforded universal health coverage if we hadn’t put in the Bush tax cuts to the wealthiest.

  2. Generally good news, so on one small level let’s take it. Unfortunately these numbers do not factor in the large number of people whos Unemployment Benefits have been exhausted and they are no longer eligible to be figured into the claims data. That fall-off in Unemployment Claims in-part is due to aka “real people in need” and that tempers the good news for me anyway during this Holiday Season.

  3. @Terry: The data are for new claims. The number of people on unemployment has dropped significantly since last year, as has the number of those on extended benefits. The reduction in new unemployment claims is due to fewer people being laid off. The total number of people out of work or underemployed is also declining, but not as substantially as the newly unemployed.

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