Layoffs decrease again on gradually improving jobs picture
Jobless claims of 404,000 for the week ending January 15 were better than anticipated, and considerably lower than the revised 441,000 claims filed in the prior week.
This week’s report lends some credence to the argument that recent results may have been unfavorably skewed by the holiday season, with the spike for the week ended January 8 offsetting the below-trend claim numbers from the end of December, rather than representing a reversal of the gradual decline.
Given the volatility of the weekly figures, the continued downward trend in the 4-week moving average is a welcome development.
While the broad economy appears to be on a gradual trend toward stronger growth, consumer sentiment remains challenged. High unemployment and the rising cost of gasoline have continued to leave a bad taste in their collective mouth. As economic data continues to improve, consumer confidence should be regained, helping to reinforce a virtuous cycle.
As jobless claims retreat toward more favorable levels, job stability concerns should ultimately improve for those outside of the 9.4% unemployed, potentially diminishing the recent focus on savings with some pent-up spending demand.
We anticipate that the Fed’s accommodative stance will be supportive in ultimately lowering the unemployment rate and spurring stronger growth. The extension of the Bush-era tax cuts should also allow individuals to maintain or increase their spending in the year ahead, all else being equal.