Economy In Focus: Weekly Jobless Claims Fall

After a dismal non-farm payroll report (NFP) last week that badly missed expectations, unemployment benefits fell for the second week in a row. Another sign that the sharp, expectant, slowdown in job growth for December was temporary and not the norm.

Initial claims for state unemployment benefits fell 2K to 326K (these are seasonally adjusted numbers). Claims for the week before were revised lower by 2,000. We had expected applications to fall to 328,000 for the week that ended January 11. The four week moving average also fell. We saw that number decrease by 13,500 to 335,000.

If you recall, the NFP last week showed that only 74,000 new jobs were created. We had seen 241,000 in November. At first, this dismal report brought the Federal’s Reserve’s steering of the economy, reduction of its QE and timing into focus. We now know, as they did, the huge drop off was weather related as a series of blizzards and sub-arctic temperatures paralyzed the nation.

The report also showed that the number of people still getting benefits under the state level increased after their first week. This number was up 174,000 to 3.03 million for the week that ended January 4. This is the highest level since July of 2013. There is a total of over 4.7 million people receiving unemployment benefits in all programs for the week that ended on December 28. Benefits for 1.3 million also expired that same week.

Consumer Prices Come in Tame

US consumer prices saw their largest increase in nearly six months for the month of December. This comes as we got an increase in the cost for gasoline. However, there is very little to suggest that inflation is picking up. It remains muted in the world’s largest economy.

The CPI rose 0.3 percent after coming in flat in November. In the 12 months before December, the CPI accelerated a paltry 1.5 percent after increasing 1.2 percent in November. These numbers are in line with what economists expect and below the fed’s target.

Removing energy prices from the report, the core CPI rose only 0.1 percent. This was down from November’s 0.2 percent rise. The increase over the past 12 months is well below the Fed’s target and came in at 1.7 percent. It has stayed steady at this number for four months now. The Fed has set its target for inflation at 2 percent.