We see some slight improvement in the weekly unemployment indicator. I would have liked to have seen a bigger move, as we have entered a period with no obvious short term trend. This week’s Unemployment Insurance Weekly Claims Report has been released. New claims dropped to 462,000. Last week’s figure was revised down 1,000. The new claims number was inside the Bloomberg consensus range of 450k to 470k. From the report:

In the week ending March 6, the advance figure for seasonally adjusted initial claims was 462,000, a decrease of 6,000 from the previous week’s revised figure of 468,000. The 4-week moving average was 475,500, an increase of 5,000 from the previous week’s revised average of 470,500.

The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Feb. 27, unchanged from the prior week’s unrevised rate of 3.5 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Feb. 27 was 4,558,000, an increase of 37,000 from the preceding week’s revised level of 4,521,000. The 4-week moving average was 4,581,000, unchanged from the preceding week’s revised average of 4,581,000.

Last year at this time we were also in a bit of a trendless slump. That period ended with a convincing (and badly needed) down-trend. Such moves in the seasonally adjusted data are, by definition, non-cyclical. I wouldn’t criticize the adjustment techniques if we saw a repeat, though.

The unadjusted new claims are closely tracking the adjusted numbers right now:

The advance number of actual initial claims under state programs, unadjusted, totaled 460,287 in the week ending March 6, a decrease of 10,969 from the previous week. There were 652,636 initial claims in the comparable week in 2009.

The advance unadjusted insured unemployment rate was 4.2 percent during the week ending Feb. 27, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,528,856, a decrease of 68,281 from the preceding week. A year earlier, the rate was 4.8 percent and the volume was 6,361,354.

The good/bad lists highlight problems in New York and California.

The good list (-1000 or more): PA, MA, NJ, KY, MO, MD, AL, IA

The bad list (+1000 or more): TX, FL, NY, CA

CA (the worst) was +16,112 vs PA (the best) at -4,772. New York was +12,263. Both of the top states blamed layoffs in the service industry. California also blamed a return to a five day workweek.

There have been some noteworthy developments in the last week.

For those looking to the government for support, a $15 billion jobs bill has passed the Senate and is now in the House. This bill effectively dropped $100 billion in infrastructure projects in favor of tax cuts for hiring. Unfortunately, this will not likely be much help. Since our infrastructure is a national embarrassment, there’s justification for jobs targeting infrastructure (where we would disagree is on the price for such work and the prioritization of specific projects). Tax credits are hard to get right if your goal is increased hiring. Since businesses deduct employee compensation before computing their income taxes, such taxes (or credits) have little impact on hiring decisions. Microsoft and Cisco have both used stock option expensing to avoid paying any income taxes before. Payroll taxes are another matter. Since payroll taxes directly add to hiring costs, tax credits there can motivate hiring, providing the business can profitably use the additional workers. In the short term, this isn’t a guarantee. Instead, this would be like the new homebuyer tax credit, where most of the money goes to people who would have bought/hired anyway. The marginal gain for the new homebuyer tax credit was less than the marginal cost (it would have been cheaper for the government to directly buy people homes). This is a product of short term tax credit programs. Longer term tax credits have the benefit of establishing an equilibrium with a lower cost, which does increase hiring. But it is dangerous and expensive to confuse short term and long term impacts from such changes. The discussion on this bill has focused on income tax credits, so the above is largely academic.

Census hiring will provide a significant boost to the employment numbers this month (and will weigh heavily on the employment numbers a couple months later).

The Senate passed a 10 month extension to unemployment benefits (including COBRA) as part of the American Workers, State and Business Relief Act. The bill is now in the House. I don’t know if that’s the same as the jobs bill. I hope it isn’t.

I’d still like to see another week of declines in the new claims numbers. We need a trend down. The employment environment is too volatile. Even if census hiring brings us a positive month of jobs numbers, a jobs-creating recovery cannot be sustained with our current volatility.