The weekly jobless claims for the week ending October 8th rose by 13,000 to 462,000. Economists had expected the number to fall 443,000. Our economy is still bleeding jobs at a record pace with little sign that companies will be hiring with any urgency, soon. The continuing claims fell by 112,000 to 4.4 million which was large in part by people that had exhausted their benefits.
The four-week moving average of job claims also went up by 2,250 raising the number to 459,000. Economists prefer to focus on the four-week average which gives a better story on the losses in jobs. Just a year ago, the initial jobless claims totaled 521,000 and the four week moving average was 534,000 with total unemployment claims at 5.95 million. The numbers are going down, but certainly not enough to celebrate.
The initial claims would have to fall below 400,000 during the next two quarters for investors and economists will have the confidence that companies will curtail lay-offs and resume hiring. Our government concurs that claims are stuck at levels that signal that employers are not ramping up for hiring.
Next year appears to be a challenging year for the job seeker. Yet, with Bernake ready to further lower interest rates to historic lows (there goes any return I may get on my money market); the stock market showed modest losses while gold continues to rise. Determined to generate more jobs to get our economy "unstuck", Bernake is convinced that by further lowering interest rates this will create incentive borrowing and spending by companies and consumers.
It hasn't really worked yet, so why would it work now? The banks are still reluctant to pass out that money they have accumulated, and loans are difficult to secure if you have amassed debt; so the story remains the same. Some economists have stated that it will take 5-10 years, starting in July, 2007 for our economy to get to a point where it will create a fertile job environment where companies will add staff in numbers. So maybe, 2012 will be a better year?
I believe that our government is making all the wrong moves in an effort to "save" our economy. They are adding on record debt to an already billowing deficit. Our taxes are going to increase substantially that most can ill-afford. Too few people are taking care of too many people. The banks collect money, but don't loan it. The federal government by buying bonds is lowering the interest rate, so investors lose money. Gold, silver and other metals appears to be the only place to get a ROI these days!
My opinion is that low inflation is okay for now with less people working. Mr. Bernake please leave the bond and interest rates alone and take a vacation!