The number of Americans filing new claims for jobless benefits fell to a 14-year low last week, a positive signal that could counter doubts over whether the economy is shifting into a higher gear.
Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 264,000, the lowest level since 2000, the Labor Department said on Thursday.
The decline suggests the labor market is gaining steam even as worries grow that the economy will not be strong enough for the Federal Reserve to hike interest rates around the middle of next year.
Weak retail sales data on Wednesday shook investor convictions over the path of Fed policy and helped fuel a global sell-off in financial markets that continued on Thursday. U.S. stock futures declined even after the claimsdata.
The report nonetheless reinforces expectations that slack in the labor market is being reduced, which would push the Fed closer to raising rates.
"Have we achieved full employment? Not yet. Are we getting closer? Absolutely," said Stephen Stanley, an economist at Amherst Pierpont Securities.
The jobless claims report comes a day after the White House released an upbeat fact sheet on long-term unemployment. The percentage of Americans who have been jobless for six months or more has fallen to 2.5 percent in December to 1.9 percent last month, a decrease of 900,000. As the Monitor reported Wednesday, such strides on the employment front could be good news for Democrats in upcoming midterm elections:
Accounting for the job-market gains isn’t as simple as a pro or con political slogan.
For one thing, the adage that “time heals all wounds” often applies to economies. One would expect the job market to be better five years after a recession, even if the response by policymakers was somewhat flawed.
Another factor worth noting is that the lingering challenges for the unemployed are larger than the official numbers portray. Many economists believe that a sizable number of Americans – as many as 2 million – have become too discouraged to look for work, and so aren’t even counted as unemployed.
A final caveat to the “progress” story: The jobs recovery has been slow – slower than in many past rebounds and slower than the Obama administration itself expected in 2009.
All this said, it’s undeniable that the job market has improved considerably – and that the conditions confronting Obama and other policymakers were unusually tough. The 2007-09 contraction hasn’t been named the Great Recession for nothing.
In surveys, economists have widely supported one key, early Obama step: the large stimulus package including tax cuts and government spending on things like infrastructure and aid to hard-hit states.
Since 2010, Obama has sought additional infrastructure spending and additional help for the long-term unemployed, but Republicans in Congress haven’t signed off on such moves. (Congress halted an extended unemployment benefit for the long-term jobless at the end of last year.)
In an August survey, 34 percent of business economists saw policy on taxes and spending as “too restrictive” for the economy, while 22 percent saw policy as too stimulative. The rest saw fiscal policy as about right, the National Association for Business Economics survey found.
This doesn’t mean that economists see all of Obama’s policies as great for growth.
Republicans criticize the president for not cutting a deal to reform the tax code – especially to help attract more business investment to US shores. They say he should be doing more to promote the growth of jobs in the energy industry. And they say he has piled more regulations on the economy rather than reducing them.
U.S. stock futures were pointing to a lower open on Thursday. The S&P 500 index on Wednesday closed at its lowest level in six months.
While the spike in layoffs during the 2007-2009 recession is decidedly in America's rear-view mirror, the pace of hiring has only increased modestly over the last year and the jobless rate remains elevated at 5.9 percent.
Economists polled by Reuters had forecast claims rising to 290,000 for the week ended Oct. 11.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,250 to 283,500, also its lowest level since 2000.
The Labor Department said there were no special factors influencing the state level claims data.
The report showed the number of people still receiving benefits after an initial week of aid rose 7,000 to 2.39 million in the week ended Oct. 4. (Reporting by Jason Lange; Editing by Paul Simao)