12/8/2011
By David Urani, Research Analyst

Take a look at initial jobless claims, which continue to be one of the best feel-good stories of late. Claims for last week fell down to 381,000 from 404,000 while the Street was looking for 395,000. The key takeaway here is that claims were at their lowest since February. We can say with confidence at this point that claims have been on a steady downtrend for the past couple of months, boding well for the employment situation. To clarify though, the four week average remains at 393k, just below 400k, and from an objective standpoint that's still not good enough.

The most interesting item in the report was the 174,000 drop in extended unemployment, which took the amount of claimants down to 3.58 million from 3.76 million. On the surface, that would seem like a good thing, and at least partially it did reflect the slow and steady decrease in initial claims. However, digging deeper one sees that between regular extended benefits and the 2008 emergency extension, 212,604 people fell off of extended unemployment in the week ended November 19.

You can't quantify it with these numbers, but one has to wonder which is having a bigger effect on the economy; unemployed finding jobs, or unemployed losing benefits. On the one hand, there are too many people getting too much of a free ride from the government, and in the long term it hurts our collective character. But at the same time, we can't ignore the immediate impact of such a large amount of people suddenly being cut off. Hopefully this motivates a decent proportion to look harder for jobs, but you can certainly see now why the Dems are pushing hard to continue extensions.

David Urani
Wall Street Strategies