Job Reports Signal Stronger Economy

Weekly jobless reports for the week ending with January 19th go against the idea that the conditions in the labor market are pointing towards a recession.

Job clames ending during this week rose 1,000 to 302,000, which is well below initial estimates of 320,000. The four week moving average, which is considered a more reliable measure, was just under 315,000. A general consensus among economists is that 350,000 is the dividing line between recession and growth.

Worries about recession heightened three weeks ago when the government reported that the unemployment rate jumped three-tenths of one percent in December to five percent. That figure triggered alarms because it out the jobless level more than half a percent higher than its economic expansion low. A move of that size usually indicates a recession.

These recession worries have also been fueled by reports such as the Federal Reserve slashing the federal funds rate three quarters of a percent Tuesday. As well as the growing likelihood of a massive financial stimulus package being released shortly.

At the same time, the jobless data is unlikely to put an end to worries about the economy. Next week, the government reports nonfarm payroll data and the unemployment rate for January. Job growth is expected to be weak – about 50,000 versus 18,000 in the previous month. The jobless rate, however, is expected to remain at 5.0 percent.

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