March 11, 2010

Carrick: Persistently high initial jobless claims in U.S. in early March

Initial jobless claims in the U.S. in the latest week, ending March 6, remained at a relatively high number: 462,000. This was a decline of only 6,000 versus the previous week’s level of 468,000.

An initial jobless claims figure of 500,000 is the benchmark at which the labour market changes dramatically. That is when new hirings just about equal firings.

The U.S. has been at 500,000 or less since the beginning of November 2009. Also since November of last year, net employment in the country has been close to zero (i.e. neither an increase nor much of a decrease in employment).

A year ago, for the week ending March 7, 2009, initial jobless claims were close to their maximum in the recession at 657,000. The first quarter of last year was also when job declines were the most extreme in the U.S., approaching 800,000 on a month-to-month basis.

The latest jobless claims figure will be discouraging for analysts who expect a big jump in the employment level in March, after severe winter weather along the Atlantic Coast held back some new hirings and re-hirings in February.

So far, the U.S. economy has been engaged in a “jobless recovery”. The lack of new jobs seriously impedes the confidence needed to undertake major consumer spending initiatives and new home purchases. More than 8 million Americans lost their jobs in the recession.

-Alex Carrick, CanaData chief economist

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