Unemployment Applications Reach Record Low

The U.S. Department of Labor has reported that weekly jobless applications fell by 12,000 to 350,000 for the week ending December 22. The four-week average fell to 356,750 applications, its lowest level since March 2008. However, since unemployment offices were closed two days for Christmas, the figures could be distorted and will likely be revised to more normal numbers during the final week of December. For the year, layoffs fluxed between 360,000 and 390,000 per month with an average of 151,000 jobs added between January and November 2012.

The decline elicited guarded optimism from economists despite the likely distorted nature of the data. Many expected the revised numbers to reflect the addition of about 150,000 jobs in December. Companies still seem to be unaffected by the impending fiscal cliff in their hiring behavior.

For the week ending December 8, 5.48 million people were receiving unemployment benefits, up 73,000 over the prior week. This number includes 2.1 million people undergoing long-term employment (over 6 months) and receiving extended benefits; a program ending on January 1 unless an extension is granted. The extension is a point of contention between Republicans and Democrats as they seek to agree on a budget to avoid the fiscal cliff.

While the economy is showing signs of improvement, consumer confidence fell to a five-month low over concerns of higher taxes. The 2012 holiday shopping season has also been measured as the weakest since 2008 when the country was in the depths of recession. Most economists expect some degree of tax increase in 2013 and slow economic growth at least through the first half of the year.