Average monthly jobless claim to be high
February 22, 2008
Even though the jobless claims took a fall in the relatively short week, the four week monthly average edged to a higher level than in the previous months. The drop in jobless claims which came as a surprise to many economists is believed to be only a short term phenomenon and that things would return to normal in some time. The four week average in the month of February however was the highest average in the past 28 months. This indicates how high the number of jobless people is in the country at the moment.
The labor department on the 21st of February announced that the number of jobless claims had gone down by 9000 in the previous week to become a total of 349,000. Almost all the economists in the country unanimously said that this drop in jobless claims was way bigger than what had been expected. However they said that, in the State of California, the offices were closed for one day because of a state holiday. This would mean the jobless people would have one day less than the usual to file their claims for unemployment.
The four week average, which gives a better picture of the current scenario however, is very bad indeed. This average gives a clear indication of the current labor market trend. It is alarming to note that this has risen to 360,500. This was the highest level the unemployment claims have come to since the month of October in 2005 when the jobless claims had risen very high as a result of the havoc created by the Hurricane Katrina.
Analysts of the labor market said that the big rise in the four week average was indicating a labor sector which is being heavily strained by an ever slowing economy. The Federal Reserve on the 20th had come out with forecast of the growth of the economy that would happen in the year. In this report, however, they were of the view that the country still has the resources to avoid its economy going into a recession.
On the other hand many other private economists in the country are of the opinion that the country is already in a recession. They say that the economy has already entered a downturn which started from this quarter. They believe that this downturn is going to last throughout the spring. These economists are also predicting that the growth rate of the country is going to turn negative in the first two quarters of this year. The growth rate of USA in the last three months last year was only 0.6 percent. So what the private economists predict also holds true. Theoretically an economy is said to be in a recession when it goes through 2 consecutive quarters of negative growth.
Even though many attempts like the stimulus plan have been implemented by the State to avoid a recession and to keep the economy in a strong position most of them would start functioning only after or in the middle of the third quarter. So the first two quarters are definitely going to be a period of very slow growth.
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