February 16, 2012
In the latest sign that economic recovery is taking hold, the number of U.S. workers applying for unemployment benefits dropped to its lowest level in nearly four years last week.
The Labor Department announced that applications for unemployment benefits for the week ending February 11 fell by 13,000 to 348,000 -- the smallest number of claims since March 2008. The decline indicates that in all likelihood, fewer workers are being laid off and more are being hired. The good news follows a positive January jobs report released by the Labor Department earlier this month, which found that payrolls climbed by 243,000 jobs in January and that the unemployment rate had dropped to 8.3 percent.
As reported by the Associated Press, the latest report from the Labor Department said that the four-week average dropped for the fifth straight week to 365,250. In the past year, the average has fallen nearly 13 percent.
"The job market is getting better and that's really key," noted Kevin Caron, market strategist at Stifel, Nicolaus & Co. in Florham Park, New Jersey, who was quoted by Reuters. "We're still in the early innings of this, but I'm glad to see another data point that adds to the picture of an improving economy."
John Lonski, chief economist for Moody's Capital Markets Group, agreed. "The labor market could be going through an important turning point that would lend respectability to the current economic recovery," he told CNN Money. But he cautioned that the U.S. economy could be impacted by troubles overseas in the future. "Unfortunately," he said, "the menacing situation in Europe and the world's major exporting region does not want to go away."
The drop in unemployment claims came as a surprise to many. Various economists had predicted that claims would rise to 365,000.
Still, some said that the Labor Department numbers don't tell the whole story. As pointed out by CBS MoneyWatch, many workers who are not receiving extended benefits have given up looking for jobs, and are thus no longer counted as part of the workforce.
"It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work," said Ben Bernanke, chairman of the Federal Reserve, who was quoted by CBS MoneyWatch. "There are also a lot of people who are out of the labor force because they don't think they can find work."
CBS MoneyWatch also noted that the labor force is reportedly smaller now than it was in 2009.
Compiled by Yaffa Klugerman
"Don't Believe Hype About Drop in Unemployment Claims," cbsnews.com, February 16, 2012, Constantine von Hoffman
"Instant View: Jobless Claims Drop to Near 4-Year Low," reuters.com, February 16, 2012
"Jobless Claims Plunge To Nearly Four-Year Low," money.cnn.com, February 16, 2012, Aaron Smith
"Unemployment Applications Drop to a 4-Year Low," latimes.com, February 16, 2012, Associated Press