Jobless Claims Suggest Labor Market Upturn
Thursday, January 19, 2012
CMC UPDATE: Jobless Claims Suggest Labor Market Upturn
Abdur Chowdhury, Ph.D., Chief Economist
Jobless claims dropped by 52,000 to a seasonally adjusted 352,000 in the week ended January 14. This is the lowest level since April 2008. However, the monthly average is a more accurate indicator of the labor market as it reduces volatility in weekly data. The average of new claims over the last four weeks is 379,000. This level is historically linked with a modest rate of hiring.
As we have said in the past, as long as jobless claims stay below the 400,000 level for a sustained period, we will see a significant drop in the unemployment rate. All indicators suggest that we are seeing an upturn in the labor market. If this trend continues, the unemployment rate in January will drop below the 8.5% mark. While Europe is struggling and heading into recession the U.S. continues to slowly gather strength. This is another encouraging sign for the health of the economy and likely consumer sentiment. The markets should view this favorably.
Dr. Abdur Chowdhury is the Chairman of the Department of Economics at Marquette University, the Chief Economist at Capital Market Consultants, Inc. (CMC) and a member of the Federal Reserve Board of Chicago’s Academic Advisory Council. CMC provides capital market, investment manager and economic research to Ellenbecker Investment Group. For more information about Capital Market Consultants, Inc. see their website at www.cmarkc.com.
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