First-Time Unemployment Claims Drop To Seven-Year Low; Pre-Recession Levels

Updates

May 17, 2014:  AP is reporting:

Unemployment rates fell in nearly all U.S. states last month, and half the states now have rates below 6 percent. The figures are a sign of widespread, if slow, improvement in the nation's job market.

Unemployment rates fell in 43 states in April.

Hiring wasn't the whole reason rates fell in many states: Fewer Americans also looked for work. The government doesn't count those out of work as unemployed unless they are actively hunting for jobs.

Many of the states with low unemployment are small. North Dakota continues to have the lowest rate nationwide at 2.6 percent. That's the same as the previous month and down from 3 percent a year ago. Vermont's rate of 3.3 percent is the next lowest.

But some larger states are also seeing improvement. Texas' unemployment rate fell to 5.2 percent in April from 5.5 percent in March. Employers added 64,100 jobs last month, the most of any state.

Rhode Island reported the highest unemployment rate at 8.3 percent, followed by Nevada at 8 percent. Both states saw significant improvement, with Rhode Island's rate falling from 8.7 percent and Nevada's from 8.5 percent.

Based on the comments, it sounds like most readers don't believe these figures.

Original Post

Now that inflation is ticking up, and long-term benefits have run out, people have to get back to work. Jobless claims hit seven-year low. is reporting: Reuters is reporting:

New applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April, pointing to a firming economy.

The economy's outlook was further brightened by other data on Thursday showing factory activity in New York state expanding at its quickest pace in nearly four years in May.

Analysts miss again:

Initial claims for state unemployment benefits declined 24,000 to a seasonally adjusted 297,000, the Labor Department said, offering fresh evidence the jobs market was strengthening.

That was the lowest reading since May 2007 and brought claims back to their pre-recession level. Economists had forecast first-time applications ticking up to 320,000 last week.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 2,000 to 323,250.

Question?

This is the question readers need to be asking themselves. Analysts had expected claims to tick up to 320,000 (a gain of 1,000, from 319,000 the week before). So, the analysts were off again, this time by 25,000. One has to ask the question: how can the analysts be off by so much? I know the analysts have trouble with the "human factor," predicting how many folks will voluntarily drop out of the labor market, quit looking for work, but that statistic (the number of folks who drop out of the labor force) should not affect "first time claim applications." If indeed this is a trend, we've had two months, of fewer first time claim applications, it's a great sign for the economy. My hunch is that we have probably moved to a new number about which to oscillate. Up until recently that number was 320,000. Perhaps the new number is 300,000.