|New claims for unemployment benefits dropped last week to their lowest level since May, but they have see-sawed for several weeks and are not much lower than they were in January. (Matt Rourke/Associated Press)|
Jobless claims paint an unclear picture
Week-to-week fluctuations make predictions hard
WASHINGTON — Applications for unemployment aid have been fluctuating from week to week, offering an uncertain view of layoffs and the job market.
First-time requests for jobless aid dropped last week to their lowest level since early May, the government said yesterday, erasing increases made in the last two months.
Still, economists say it is hard to detect a trend in one week of declines. Initial claims have seesawed for several weeks and are not much lower than they were in January.
Elevated unemployment claims, along with last month’s weak jobs report and a struggling housing market, have suggested the economic recovery is slowing.
“While the report is good news, it would need to be followed up by several more weeks to suggest a pickup in hiring,’’ Julia Coronado, an economist at BNP Paribas, said in a note to clients.
Meanwhile, the number of unemployed Americans receiving benefits is dropping sharply because their aid is ending. About 350,000 people stopped receiving benefits in the week of June 19. Most of them were cut off because Congress has yet to extend federal jobless aid.
The Labor Department estimates that about 1.7 million have lost benefits as of last week, after extended unemployment insurance expired in late May. Those numbers could reach 3.3 million by the end of the month if Congress does not pass an extension after it returns from recess next week.
During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states. But Senate Republicans have blocked efforts to continue those extra benefits, citing concerns about the size of the federal budget deficit.
Initial jobless claims fell by 21,000 to a seasonally adjusted 454,000, the Labor Department said yesterday. The four-week average of claims dropped slightly to 466,000 last week. In a healthy economic recovery with rapid hiring, claims usually fall below 400,000. Claims are down from last year’s peak of 651,000 in March 2009 but are barely below early January’s level of 456,000.
A bigger concern is the number of people who may lose benefits this month. The tally of people continuing to claim benefits plunged to 4.4 million, the department said. But that doesn’t include an additional 4.6 million people who received extended benefits paid for by the federal government in the week that ended June 19. That is the latest period for which data are available.
Diane Swonk, chief economist at Mesirow Financial, said many people losing extended unemployment may seek aid through Social Security, food stamps, and welfare.
Other economists noted that the end of extended benefits could cut Americans’ incomes by as much as $41 billion, potentially reducing consumer spending in the coming months.
First-time jobless claims might have been higher if General Motors had implemented its traditional summer shutdown. The automaker usually closes its factories for several weeks in July to retool for new car models that it introduces in the fall.
Many autoworkers file claims for unemployment during that time. But the company has said this year it will skip the shutdown, potentially lowering claims over the next several weeks.
Still, stock markets rallied on the news. The Dow Jones industrial average rose by 46 points in afternoon trading.
Also, the Federal Reserve said borrowing dropped by $9.1 billion in May and by $14.9 billion in April. Consumer borrowing has fallen in 15 of the past 16 months as households have struggled with uncertain job prospects and battered finances following a deep recession.