Hold on For a Bumpy Ride Dow as Unemployment Claims Remain Low

 By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 229,000 1st time claims for unemployment insurance for the week ended March 17 an INCREASE of 3,000 from the prior week;
  • The number of initial claims for the week ended March 10 was UNCHANGED at 223,000;
  • The four-week moving average of first time claims ROSE 2,250 to 223,750;
  • Four week moving average represented 0.144 percent of employment, UP from 0.143 the previous week;
  • The number of continued claims –individuals who have been collecting unemployment insurance — reported on a one-week lag, for the week ended March 10 was 1,828,000, DOWN 57,000 from the previous week’s UPWARDLY REVISED 1,885,000;
  • The four-week moving average of continued claims DECLINED 11,750 to 1,880,500;

Data Source: Department of Labor 

Trends:

  • The number of continued claims for unemployment insurance dropped to its lowest level since December 29, 1973 (1,805,000)
  • The moving four-week moving average of continued claims fell to its lowest level since January 5, 1974 when it was 1,838,500.

Image result for unemployment insurance

How low can claims for unemployment insurance go…and what do we do when there are no more individuals unemployed? Those questions may not be academic but could have serious economic ramifications. For one thing, low unemployment could freeze businesses where they are with no new enterprises starting and no expansion of existing firms.

For another, it could mean a sharp competition for workers which, in a perfect world, would drive wage rates up.

But as wages increase so will prices with no appreciable increase in the standard of living unless productivity increases as well.

Those may not be pleasant problems to have which goes to explaining the actions of the Federal Open Market Committee in boosting interest rates one day before the unemployment claims report was issued.

The ride up may be as bumpy as the ride down was.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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