New claims for unemployment benefits unexpectedly rose last week. The increase wasn’t huge — up 15,000, to 576,000 — but it’s yet another reason to think the economy is going to feel as if it’s in a recession for some time to come.þþSome economists think the economy is in fact still in a recession; others think the recession ended around the start of the summer. That is essentially a debate about whether the overall output of the United States economy has started growing again. Either way, the job market isn’t likely to be in good shape for some time.þþHere is what Joshua Shapiro of MFR Inc. — who has been more pessimistic and more right than many economists in the last year — wrote to his clients this morning about the report on jobless claims:þþAn initial claims level such as that reported today is consistent with continued weak labor market conditions (-450K or so for nonfarm payrolls), albeit less weak than when the peak rate of claims on a 4-week moving average basis was about 80K higher than this week’s reading.þþThe pace of future declines in claims and the message this sends regarding payroll employment will be critical. We expect the improvement to be considerably more gradual than that seen at the beginning of the move, which we feel was basically a correction of an upside overshoot that occurred during the panic/paralysis phase of the recession. þþMr. Shapiro is suggesting that monthly job losses will tick up in coming months, before starting to decline again. In July, the economy lost 247,000 jobs, the smallest loss since August 2008.þ
Source: NY Times
