Initial jobless claims came in, as expected, at 420,000 this morning. That’s improvement over last week and shows improvement in the long-run.
But does it even matter?
The reality is that, while claims are improving, the U.S. has a structural unemployment problem that isn’t being addressed. There just aren’t any jobs of workers who’ve been hit the hardest by the housing collapse, and with the way the housing market is going, there likely won’t be for some time.
And that’s why we’re not seeing a movement in the unemployment rate.
From Waverly Advisors (emphasis ours):
Note that the present situation is complicated by the fact that a weak market for unskilled workers were covered over by the housing boom, causing convergence in negative long and short term trends.
What does this mean? Simply that the structural nature of unemployment now is significantly different than during historical comparables and that moribund job creation can keep unemployment levels sticky even as claims begin to recede due to persistent long -term joblessness. As such we continue to hold our bias despite improving claims.
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