This past week Federal Reserve Chair Ben Bernanke more or less predicted a reversal of the economic downturn by the end of the year. But do the latest data from the Department of Labor suggest that the dismal unemployment situation may be turning a corner?
According to President Obama's own early estimate given at his April 29th press conference, some 150,000 jobs have so far been saved or created as a result of the economic recovery act. Many projects targeted for recovery act funds are yet to be started and much of the funding as been made available but still hasn't arrived at its destination. Simply put, the greatest impact of the recovery act is yet to come. The Department of Transportation estimates that most construction projects will get into full swing by the summer.
Obama's Senior Advisor David Axelrod recently described unemployment as a 'lagging economic indicator' of the economic picture, meaning that jobs numbers are among the last of the major economic indicators to signal recovery.
With mixed numbers in housing starts and foreclosures, a central problem in the current crisis, and weak business inventories, it isn't clear that many economic indicators are yet showing signs of recovery.
According to Department of Labor statistics released today, May 6th, initial jobless claims for unemployment benefits for the week ending May 2nd decreased from the previous week by 34,000 to 601,000. This means that 601,000 newly laid-off people filed for unemployment benefits during that week. This week's numbers put the moving four-week average down by about, 14,500, the DOL reported.
Put into perspective, this same week in 2008 saw about 378,000 initial jobless claims. That was the fourth month of the current recession.
In the month of March 2009, the unemployment rate jumped to a 25-year high of 8.5 percent after the economy shed more than 663,000 jobs. Since the beginning of the recession in December 2007, about 6 million jobs have been lost. Economists estimate the rate for April will jump to as high as 9 percent.
This past week, California, Georgia, South Carolina and Wisconsin saw the largest decreases in the number of new jobless claims as those states reported fewer layoffs in the construction, trades and manufacturing sectors, a sign that recovery act-funded projects may be picking up.
Michigan, Massachusetts and Kentucky saw spikes in initial jobless claims with layoffs in auto leading the way in Michigan and Kentucky, according to information provided to the Labor Department by the states. (Massachusetts reported their jobs report as a seasonal issue.)
State and local governments are anxious to launch new infrastructure projects and pay down budget shortfalls with federal economic stimulus money. New projects on roads, bridges, railways and airports slated for the next few weeks and months, along with new financing for public schools, community health centers, environmental clean-up projects and federal parks and buildings renovations is expected to create or save thousands of jobs.
The worsening jobs picture prompted the AFL-CIO last month to launch a new Web site designed to help unemployed workers find the resources they need to survive in the recession. The Unemployment Lifeline, as the site is called, provides information on local aid for unemployment compensation benefits, child care, medical care, utility assistance and more. It also links workers to political action on such issues as passing the Employee Free Choice Act, universal health care reform and more.
Economists warn that data from an indicator such as a weekly jobless claim report should be taken with a grain a salt. Such reports are often revised, are only a snapshot of a given moment, and do not yet indicate trends. Estimates of jobless claims do not reflect the number of jobs created in a given period that may offset those numbers. Further, while the newest numbers over the past month suggest a downward move in initial unemployment claims, the numbers of newly unemployed people remain alarmingly high.
