Economists surveyed by Bloomberg News had expected initial jobless claims to fall to 525,000 this week. Meanwhile, the four-week moving average for initial jobless claims decreased 6,000 to 526,250.
A year ago, initial jobless claims totaled 485,000 and continuing claims totaled 3.773 million.
Economists view the four-week jobless claims average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.
Economists also monitor the continuing claims stat because it provides a snapshot of how long it's going to take the typical person to find comparable employment once he/she has sustained a job loss. In general, continuing claims above three million reflect a slack labor market, and point to extended six- to nine-month (or longer) job searches.
Further, the Economic Policy Institute, a liberal think tank based in Washington, D.C., says the nation's job drought is so severe that Congress should consider a two-year job creation tax credit to increase jobs across the economy, regardless of company size or current profitability. The EPI estimates the credit would create 2.8 million jobs in 2010 and 2.3 million in 2011, with half the program's $28 billion cost recouped in lower spending on unemployment insurance, Medicaid spending, and other social safety net programs.
The largest increases in initial claims for the week ending October 17, the latest week for which data is available, were in California, 5,774; Puerto Rico, 685; Minnesota, 614; Nevada, 366; and Nebraska, 239. The largest decreases were in Wisconsin, 5,681; New York, 4,711; Pennsylvania, 4,033; Illinois, 3,670, and Oregon, 2,706.
Also, the highest insured unemployment rates for the week ending October 10, the latest week for which data is available, were in: Puerto Rico, 6.3 percent; Nevada, 5.3 percent; Oregon, 5.3 percent; Pennsylvania, 5.0 percent; Wisconsin, 4.8 percent; Arkansas, 4.6 percent; California, 4.6 percent; Michigan, 4.6 percent; North Carolina, 4.5 percent; and South Carolina, 4.5 percent.
Economic Analysis: This week's employment data was a mixed bag: one tepid stat, two encouraging stats. Even so, investors should focus on downward treks of the four-week moving average and continuing claims. Those declines, combined with signs of stabilization in housing and manufacturing, and the U.S. Commerce Department's report that the U.S. economy grew 3.5 percent in Q3 – its first increase in a year – point to declining lay-offs and job gains in the quarters ahead. Still, economists would like to see initial jobless claims fall by 50 percent or to about 275,000 in 12 months to have confidence that the young economic expansion is capable of creating jobs at a sufficient rate.
