Unemployment claims are fewer, but not few enough
NEW YORK - OCTOBER 08: Dale Chandler's unemployment insurance notice sits on a table on October 8, 2010 in the Brooklyn borough of New York City. The U.S. government reported today that the U.S. economy continued to shed jobs for the month of September. The unemployment rate remained unchanged at 9.6 percent in August
Steve Chiotakis: Fewer people last week filed for first time unemployment claims. The Labor Department said this morning the number of claims dropped to 391,000 -- that's the lowest level in five months. So is the job market turning a corner here?
Ken Goldstein is an economist at The Conference Board. He's with us now from New York to talk about it. Ken, good morning.
Chiotakis: A drop in jobless claims -- the biggest drop in five months -- that sounds like good news, right?
Goldstein: Here's the good news -- initial unemployment claims have been in a range really since late spring. And what has happened here, is instead of being at the top of that range, we're back again at the bottom of the range. So I mean, the good news is that it's down a little bit but it still is basically at the same level as it was all through the summer and really ever since late spring.
Chiotakis: So we're down to like 391,000. I know we've widely reported that anywhere between 375,000 and 400,000 -- if we get below that level, we're starting to see some job growth. Are we going to get there?
Goldstein: We might, but it's not going to be real soon. And so I think that to assume here that the labor market is finally stirring -- that's a little bit premature.
Chiotakis: What's going on in the job market?
Goldstein: The single biggest problem the U.S. economy is facing is the lack of demand. Consumers are worried about job growth, about income growth. And until they see one or the other, or both, they're not going to spend a whole lot of money. So consumers are waiting for jobs, business is sitting there waiting for the consumer to spend more money -- 70 percent of GDP -- before they're going to start to hire.
Chiotakis: It sounds like a heinous catch-22, that's what it sounds like.
Goldstein: And that's where we have been. We have been in this lousy economy now for two years. The problem here is the lack of new job growth. There's a huge number of people unemployed, but that number's not necessarily getting much bigger because people are losing jobs -- it is getting larger because fewer of those people can find new work.
Chiotakis: Ken Goldstein, an economist over at The Conference Board. Ken, thanks.