Weekly Jobless Claims Report - 'Stairway to Heaven, Highway to Hell or Sitting in Limbo?'

Initial Claims for Unemployment Insurance jumped by 43,000 last week to 474,000. However, last week was revised up by 2,000, so one could see it as a 45,000 increase. This was far worse than the expected level of 400,000.

The trend in initial claims had been downward, though there had been some bumps along the way. Recently, though, they have started to shoot back up again. That is a very worrisome trend. The weekly numbers, after an erratic few months, seemed to have broken decisively to the downside. This week did a lot of damage and makes it hard to see the trend still being in the right direction.

Let us hope the decline resumes next week. I don’t want to get too alarmist about a single data point, but combine it with the weaker-than-expected ADP jobs report, a very soft ISM services number and first quarter growth of just 1.8%, one has to come to the conclusion that the economy is softening significantly over the last month. This is the fourth straight week we have been above the 400,000 level. It is also the highest weekly level since last August.