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Jobless claims drop to a four-year low

By Catholic Online (NEWS CONSORTIUM)
January 20th, 2012
Catholic Online (www.catholic.org)

Unemployment benefits dropped to near a four-year low in the latest week, government data revealed. The latest figures proved that the U.S. job market has gained a bit of momentum. The Labor Department reported that seasonally adjusted jobless claims fell 50,000 in the week ended January 14, to 352,000 from a revised 402,000 the prior week. According to Reuters, this came as a surprise to economists that expected claims to fall only to 385,000.

LOS ANGELES, CA (Catholic Online) - The four-week moving average is considered an improved bellwether of labor market trends. "We have to see if there are some seasonality issues involved here, but on the surface this number looks to be very positive and is pretty much consistent with other data we've seen recently that suggest improvement in underlying fundamentals in the U.S.," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange says.

Consumer prices were also flat for a second straight month in December. Gas prices at the pump and food prices rose moderately, suggesting scope for further monetary easing should economic growth stall.

In addition, inflation appears to be peaking after rising steeply last year. Prices rose three percent in 2011, up from a 1.5 percent pace in 2010 and the most since 2007, down from the 12-month increase of 3.9 percent in September.

Lower inflation gives consumers more spending power, which boosts growth. It also gives the Federal Reserve more leeway to keep interest rates low and take other steps to boost the economy.

However -- a Labor Department spokesman warned that volatility in the jobless claims data at this time of year is commonplace. Applications jumped two weeks ago, as companies laid off thousands of temporary workers hired for the holidays.

Weekly applications fall consistently below 375,000, usually signaling that hiring is strong enough to push down the unemployment rate.

In December, employers added 200,000 jobs, marking the sixth straight month in which the economy added at least 100,000 jobs. And the unemployment rate fell to 8.5 percent, a three-year low.

The economy added 1.6 million jobs for 2011, up sharply from 940,000 in 2010. Economists say they expect roughly 1.9 million more jobs to be added this year.

There are miles to go before the U.S. economy can blissfully slumber. The job market has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. In addition, more than 13 million people remain unemployed. There is of course, the millions of Americans that have given up looking for work and so are no longer counted as unemployed.

The manufacturing sector remains a bright spot. Factory output jumped 0.9 percent in December, the Federal Reserve said, the sharpest monthly gain in a year. Manufacturing gained 225,000 jobs last year, the most since 1997.

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