Initial jobless claims ticked slightly upward for the week of August 20 to 417,000, while the four-week moving average moved higher to 407,500.
While the short-term trend is unfavorable, the Department of Labor noted that claims for the past two weeks were heightened by the strike between the Communications Workers of America and Verizon which has since ended. An estimated 21,000 claims over the preceding two weeks may have resulted from that strike.
Today’s result was higher than anticipated, but it is consistent with our broad view that the economy continues to bump along at a slow pace. The jobs market remains mediocre as it has for some time and, in the absence of a rapid and unexpected surge in growth, likely will in the near-term.
Recent economic data has collectively provided little reassurance about the strength and trajectory of the U.S. economy. Despite the fiscal and monetary stimulus that has been injected over the past few years, consumers continue to have their figurative eye on the door. They lack confidence in the direction of the economy and are struggling under the weight of excess debt without meaningful growth in asset values and limited income growth.
At this point, all eyes are on Jackson Hole and Fed Chairman Ben Bernanke’s speech tomorrow. The market has rallied in recent days in anticipation of the announcement of additional monetary stimulus.
If Bernanke doesn’t deliver on those expectations, the markets are likely to be disappointed; if he does deliver, questions will undoubtedly be raised about the effectiveness of additional quantitative easing. Under either circumstance, we expect that heightened market volatility will persist.
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