Good news, maybe: jobless claims drop

Initial claims for unemployment benefits fell to their lowest point since the week of May 12, 2007, the U.S. Labor Department reported Thursday, and because this statistic can serve as a proxy for the economy, that sounds like good news.

Such good news, in fact, that advocates for the unemployed worry that it will hurt their chances on Capitol Hill to push for an extension of extra federally funded jobless benefits.

For the week ending April 5, 300,000 initial claims for unemployment benefits were filed, 32,000 fewer claims than the previous week.

But the week of May 12, 2007, when 297,000 initial claims were filed, was an anomaly.

In 2007, when employment was at its pre-recession peak, initial unemployment claims fell below 300,000 exactly twice.

Mostly, they hovered in the 310,000 to 320,000 range. By the time the recession began in December 2007, they were trending up toward 360,000.

That illustrates, as most economists would agree, the folly of putting too much emphasis on any one week of initial claims.

"Claims are very volatile week to week," said economist Ryan Sweet, a director in Moody's Analytics, an economic forecasting firm in West Chester.

And, he said, the first week of a quarter will often have lower claims, because companies tend to lay off at the end of quarters, meaning those folks will have already filed for claims by the first week.

However, there has been improvement.

In the week ending March 28, 2009 - the worst week since the start of the recession - 665,000 people filed initial claims for jobless benefits.

"Claims are one of the most important economic indicators," Sweet said. "When claims are falling - more people have jobs. More jobs means more income and more income means more spending. And because consumer spending is 70 percent of the gross domestic product, it's a good proxy for the broader economy."

Because it is less volatile, economists prefer the four-week moving average of claims - that, too, was down, falling to 316,250 from 321,000 for the week ending April 5.

Meanwhile, advocates are continuing to press for extended jobless benefits.

On Monday, the U.S. Senate passed a bill extending federally funded extended emergency unemployment benefits to May 31, retroactive from Dec. 28, when they ended. About two million lost benefits.

Federal benefits had been paid after the unemployed ran out of 26 weeks of state-funded benefits available in most states, typically for an additional 37 weeks. The Senate bill would provide about 22 additional weeks, before ending on May 31.

Even if the federal bill passes, the people who filed initial claims last week would only be eligible for jobless benefits funded by the states - 26 weeks worth in most states.

So far, House Speaker John A. Boehner (R., Ohio) is holding up a benefits vote in the House, saying he wants agreement on his job creation plan.

On Tuesday, the Philadelphia Unemployment Project took a van full of unemployed people to Washington to lobby Boehner and others.

Congressman Michael G. Fitzpatrick (R., Bucks) wrote to Boehner, asking him to bring the Senate bill to a vote.

The lowered claims data "doesn't help," said Philadelphia Unemployment Project director John Dodds. "But I think it's pretty apparent that there's still a lot of need."

In March, 35.8 percent of the 10.5 million unemployed, or 3,739,000 people, were jobless for 27 weeks or longer, the U.S. Labor Department said Friday.