Good news (well, a little) and bad news in the unemployment numbers from the U.S. Department of Labor this morning.
Although the number of workers filing initial claims for unemployment climbed in the week ended January 2 to 434,000 from 433,000 in the previous week, the increase was less than the 440,000 new claims that economists had projected. The four-week moving average fell to 450,250, the lowest level since the week of September 13, 2008. Initial claims hit a 26-year high at 674,000 in the week ended March 27.
The news wasn’t nearly as good for prospects of an actual decline in unemployment. (The government reports that number tomorrow.)
The number of people who have used up their traditional unemployment benefits and are now collecting extended payments under recent 13-week and 6-week extensions passed by Congress increased by 165,000 in the week ended December 19. That brings the number to 5.44 million.
A rising number of workers collecting extended benefits goes along with an increase in the number of discouraged workers who have dropped out of the job hunt or who have found part-time jobs offering fewer hours of work than they want. When the employment market starts to improve, these discouraged and part-time workers re-join the ranks of those looking for full-time work. And that delays the day when the unemployment figures start to show an actual decline.
This delay is one reason that many economists have started to project that a 10% official unemployment rate will persist well into 2010. (The full unemployment rate that includes these discouraged and working-fewer-hours-than-they-want workers stands at 17% right now.)