There were fewer unemployment claims filed by Americans in the last week, suggesting that there is continuing improvement in the labor market, but really it means very little.
The US Labor Department reported today that there was a decrease by 22,000 in initial jobless claims to 432,000 for the week ending December 26th, from the previous week’s figure of 454,000. This is the lowest level since July 2008.
Also, the number of American’s collecting unemployment insurance fell to 4.98 million during the week ending December 19th, a decrease of 57,000 from the previous week of 5 million.
These data suggest that job losses are continue to decline. Of course, it is the holiday season and many companies have hired temporary workers to support the uptick in business. Hence, the January and February data would be more reliable in determining whether or not job losses are continuing its downward trend.
But even if job losses are on a downward trajectory, remember that America lost 8 million jobs since the recession. And according to well-known economist, Paul Krugman, the U.S. needs to keep adding more than 100,000 jobs a month to keep up with its growing population.
“If we want to see America return to anything that feels like full employment, we need big job gains, month after month. We need to add about 18 million jobs over the next five years, or 300,000 jobs a month”, says Krugman.
Put differently, it would take at least five years and some 18 million new jobs, before the jobless rate, which currently stands at 10 percent, returns to 6 or 7 percent.
So, the fact that there was a decrease by 22,000 in initial jobless claims last week, means precious little.
