To the great surprise of nearly everyone in government and economics, initial unemployment claims went way down last week. The adjusted figure was 407,000. That's a whopping 34,000 fewer than the previous week. There were 542,492 initial claims in the comparable week in 2009. Now that's significant.
Typically, I would be skeptical of these figures this time of the year, considering them to be a response to holiday hiring. But most importantly, the Department of Labor said nothing about the typical Thanksgiving/Christmas holiday. Instead, it looks as though many firms are cutting back on layoffs. That's real good news.
Again, it's important not to pay too much attention to a single week. So it's appropriate to be cautious about those figures for several more weeks. Remember from previous analyses that Mark Zandi is probably the best predictor (along with Larry Summers) of the economy and has written on numerous occasions that initial unemployment claims is the best statistic for the state of the economy.
Again, the statistical summary from Zandi can be interpreted in this fashion: Only when claims head down to 400,000 will the economy be creating enough jobs to maintain stable unemployment. Closer to 350,000 will lower the unemployment rate and mean that the recovery is evolving into an expansion. When we get to initial weekly unemployment claims of 300,000, boom times are back.