Thursday, September 23, 2010

Early this morning the Labor Department released their initial jobless claims data for the week ended September 18th. The government says the number of people standing in line to collect first-time jobless benefits grew by an unexpected 12,000 last week. The total number of claimants receiving benefits declined, while those getting extended payments rose.


The latest increase in the initial weekly jobless claims data puts an end to the string of two straight weekly drops. Looking through the weekly fluctuations, it becomes readily apparent that weekly jobless claims figures have changed little over the course of the year; the four-week moving average of claims is only 1,000 higher than its mark for the first full week of 2010.


In a nut-shell the story here is that the labor market will remain weak until demand for American goods and services accelerates to the point that business managers deem it once again financially feasible to hang out the "job opening" signs.



As all the saber rattling and political posturing of the coming months intensifies -- don't lost sight of the fact that while the Fed can trot-out another massive "quantitative easing" program to reduce the disinflation threat - the lower interest rates the central bank will attempt to create will do little to directly affect employment. Improved employment prospects depend on business confidence -- which in turn depends largely on supportive fiscal and regulatory initiatives - both of which happen to be the direct domain of Congress. The results of mid-term elections and the following congressional legislative action (or lack thereof) will have a far larger and potentially more immediate impact on the nation's labor sector than will any "quantitative easing" strategy the Fed might employ.



In other economic news of the day -- the National Association of Realtors reported August Existing Home Sales rose in August. That is the good news. The bad news is that existing home sales rose to the second-lowest level on record. Purchases of existing houses climbed to a 4.13 million annual pace, second only to July's 3.84 million rate. Job recovery continues to be the primary key to housing recovery.



These two reports, initial weekly jobless claims and existing home sales, simply added a little color to mortgage investors' developing picture of an economy slowly limping away from the longest and deepest recession since the end of World War II.