Initial jobless claims increased by 4,000 to 371,000 from last week’s print of 367,000, which was lowered by 5,000.
After spiking above 400,000 for a few weeks in the aftermath of Hurricane Sandy, jobless claims have settled back into the 350,000 – 400,000 range, consistent with where they’ve been for the past few years.
Although weekly readings can exhibit a great deal of noise, claims don’t appear to be in danger of breaking out of their recent range in either direction for the time being. The good news: claims in this range still suggest moderate job creation. The bad news? Claims in this range still suggest only moderate job creation.
Last month’s employment report was mostly positive, and as a whole the labor market appears to still be on a relatively stable path consistent with growth, but still lackluster compared with job creation in an average expansion.
The 11th hour deal to avoid the immediate impact of the fiscal cliff provided some clarity and certainly eliminates one source of uncertainty. A sharp increase in hiring seems unlikely, however, as the spending side of the debate remains unresolved and higher taxes on most households is likely to weigh modestly on consumer spending in the near-term. As such, the deal is unlikely to have a material impact on business sentiment or contribute to a materially rosier outlook for growth in the near term.
As a whole, the economy still appears to be making progress, but large hurdles still remain, including the debt ceiling debate and the pending negotiations related to spending cuts that will be taken up by policymakers in the weeks ahead.
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