Jobless claims drop, but not enough to sustain recovery

Initial jobless claims fell by 3,000 to a seasonally adjusted 456,000. This moves us back to nearly the same level of jobless claims in January, which signals that the labor market is slowly improving but remains sluggish. Laid-off workers who continue to claim jobless benefits have declined by the largest amount this year. Several reasons lie behind this large gain; one being that laid off workers have simply run dry of their initial benefits.

First time claims have remained around 450,000 since the start of this year. Jobs are still scarce, and the worry is that people may return to collecting benefits as a way to stall the recovering labor market until jobs return. This imbalance is keeping the employment curve steady. Fed Chairman Bernanke said the economy is growing, but not fast enough to increase employment.