During the week ending January 15th, there were 404,000 new claims for unemployment benefits, according to statistics released today from the Labor Department. At the same point in 2010, there were 467,000 new claims, reflecting a modest improvement over the past year. Additionally, today’s statistics show the four-week rolling average of new claims at its lowest point since July 2008, with a total of 411,750. This declining trend of new claims indicates the US economy is more stable and layoffs are less frequent in 2011.
However, a major reason why the four-week rolling average has hit its lowest point in years is due to the recent holiday season. The four-week rolling average not only includes the week ending December 25th, when new claims for jobless benefits totaled 391,000, but the four-week rolling average also includes the week ending January 1st, when claims totaled 411,000. During holidays, people are reluctant to file new claims, as well as the fact that the Labor Department’s offices close for a few business days. Also, winter weather conditions may have acted as a deterrent to file new claims. As a result, the four-week rolling average is not necessarily an accurate indicator at this time, due to the inclusion of two uncharacteristic holiday weeks.
Following these two holiday weeks, new claims for jobless benefits soared to 441,000 in the week ending January 8th. While some worried jobless claims would continue at this rate, this week’s data brought a reassuring decline to 404,000 new claims. Excluding Christmas week of 2010, 404,000 new unemployment claims are the fewest claims in a week since the second week of July 2008. Clearly, this shows an improvement for 2011.
Meanwhile, there are 9.6 million people currently receiving unemployment benefits, but this has also declined over the past year. At the same point in 2010, there were 12.1 million people receiving unemployment benefits [.xls]. In mid 2008, however, there were only about 4.5 million people receiving unemployment benefits. Therefore, even though fewer individuals are receiving jobless benefits in 2011 than in 2010, there are still over twice as many individuals currently receiving benefits in comparison to mid 2008. Without doubt, much more progress is required before the US economy shows a full recovery.
Lastly, while fewer new claims for jobless benefits shows a more stable economy in 2011, keep in mind that almost any year throughout history is stable when compared to the past two years. Still, fewer jobless claims are evidence that the economy is recovering, albeit slowly.