Ray of light: Jobless claims show signs of peaking

Are U.S. initial jobless claims peaking -- suggesting the recession is reaching a bottom? They may very well be.

Initial jobless claims fell 14,000 to 631,000, their lowest level in about a month, the U.S. Labor Department announced Thursday. Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 640,000. The four-week moving average decreased 10,750 to 637,250.

Economists view the four -week average as a better indicator of unemployment conditions, as it smooths out anomalies for strikes, holidays or other idiosyncratic events.

Signs of a turnaround?

However, continuing claims rose to a record 6.27 million -- the 13th consecutive week that metric has set a record.

The latter metric remains a data point of concern, but Jonathan Basile, an economist for Credit Suisse Holdings USA in New York, said if investors look at the aggregate data over several months, they'll begin to see positive developments.

"There's been a very large policy response to the financial turbulence of late last year and that's starting to work its way through the financial sector, and that in turn is helping to stabilize," the rest of the economy, Basile told Bloomberg News Thursday.

Through fiscal and monetary policy, the United States has added a record $12.8 trillion in stimulus to the economy and financial system. That stimulus is expected to increase demand, leading to a slower pace of unemployment claims, and, eventually, a decrease in the nation's unemployment rate, currently at 8.5 percent.

Critics of the stimulus, mainly economic conservatives, say the actions were not needed and will harm the economy by increasing both the role of government and federal taxes. Conversely, backers, mainly economic liberals, say the stimulus may not be big enough to pull the nation out of its pronounced recession, and another fiscal stimulus package may be needed.

Economic Analysis: It's not much of a positive, but we'll take it. Fewer Americans are filing first-time applications for unemployment, and as long as that trend continues, that's a good thing. Just consider lower jobless claims another 'green shoot' to go along with improving consumer confidence, and what appears to be bottoming new and existing home sales.
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