New Jobless Claims Fall Again

Rarely are home values and the job market as closely tied together as they have been during this recession. So last week's employment numbers offer a good omen for both.

The number of initial unemployment claims dropped last week, according to the Department of Labor. The rate of new claims is now close to a number economists are willing to call stable-the point at which overall unemployment stops rising.
Unemployment rates effect home values because the more people there are with paying jobs, the bigger the pool is of potential home buyers. But in this recession the connection has also worked the other way: Job losses have been causing foreclosures, which have depressed the values of surrounding properties.

In the week ending Jan. 23, the advance figure for seasonally adjusted initial claims was 470,000, according to the Labor Department. That's 8,000 less than the previous week's revised figure of 478,000. That's also down from 590,000 last year at this time.

Analysts say that a rate of initial claims of 450,000 a week indicates stability in the labor market. To bring down the unemployment rate, we'll have to get below that.

Economists predicted we would hit that rate last week, according to Wall Street economists surveyed by Thomson Reuters. But a backlog of more than 43,700 new claims from California got in the way. Turns out they built up over the holidays and Californian bureaucrats only got around to counting them last week.

Looking past the sunshine state though, 30 other states reported significantly fewer initial claims last week than the week before. But during that previous week, several other big states piled their holiday backlog onto the initial claims data.

Before this month, claims had been dropping for several months. In late December, claims fell to their lowest level since July 2008, before the financial crisis.

(Photo: An employment office in 1916, from the Engineering Department Photographic Negatives, Record Series 2613-07, Seattle Municipal Archives.)
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