Jobless Claims Fall, But 203,000 Is Still 203,000
The U.S. Department of Labor reported that initial jobless claims fell to 203,000 last week, below expectations for 208,000 and down from a revised 207,000 the week before. Continuing claims also declined, falling by 18,000 to 1.778 million, below expectations for 1.790 million, while the insured unemployment rate held at 1.2%.
By most measures, the labor market remains relatively stable. Initial claims are low by historical standards, continuing claims moved lower, and both are well below where they were a year ago. The four-week average for initial claims did rise to 205,500, but there is little here to suggest layoffs are accelerating.
Still, I think 203,000 is worth putting into perspective after some of the economic numbers we've been discussing this week. Economists, myself included, look at 203,000 initial claims and call that a low number. Historically, it is. But 203,000 people still filed new unemployment claims in a single week. More precisely, the Labor Department defines an initial claim as one filed by an unemployed person following a separation from an employer.
There has to be some balance between those two ways of looking at the economy. Our job as economists is to put numbers into context, not make them sound worse than they are. But we also shouldn't become so accustomed to calling 200,000 claims “low” that we forget there are people behind the number. That seems particularly relevant this week. Consumer confidence fell again even as GDP, business activity and other measures suggest an economy that continues to hold up reasonably well. Those things aren't necessarily contradictory. Yes, most Americans are still working, but households experience the economy personally, not as an aggregate statistic.
Continuing claims provide some reassurance. At 1.778 million, they are down from 1.942 million a year ago. We don't know what happened to everyone who left the unemployment insurance system, so that decline shouldn't automatically be interpreted as everyone finding work. Still, there is little here to suggest a broad deterioration in the labor market.