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Weekly unemployment dip due to auto industry

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Jeremy Hobson: The Labor Department said this morning that the number of people applying for unemployment benefits fell by 26,000 last week to 350,000. That’s the best number since March of 2008. 

And it’s where we’ll start now with Diane Swonk, chief economist with Mesirow Financial. She’s with us live from Chicago as she is every Thursday. Good morning.

Diane Swonk: Good morning

Hobson: Well Diane, what’s with this big drop in the number of people asking for unemployment benefits?

Swonk: Well, I’d love to say that it is a major improvement in the labor market, but it’s really more a quirk in the way the adjustments are done. We actually have seen the auto sector as a bright spot in the economy, and the auto sector did not shut down for retooling many of its plants because it wanted to keep production going in July, as it usually does during the first two weeks of July. We’ll see those unemployment, those jobless claims pick up again as we move through this seasonal quirk in the numbers. The good news is the auto sector is ok, but it’s really overstating the extent to which the labor market is really improving at this stage of the game. 

Hobson: So just a seasonal quirk, what do you think is going on with the big picture on jobs right now?

Swonk: It’s still a very tepid labor market, employment market out there. Anyone looking for a job can certainly confirm that. I wish there was a much more stronger employment market, but this is still very tepid at its very best.

Hobson: What about the housing market, Diane? We got some numbers today the foreclosure listing firm Realtytrac that say foreclosure activity is actually down compared with a year ago, and there seems to be some talk out there that maybe we’ve finally reached a bottom in the housing market. What do you think?

Swonk: I think we have reached a bottom in the housing market. It’s a soft bottom at best, but it is a bottom, and that’s one of the bright spots along with the auto industry in what continues to be a very uneven recovery. That said, I look at the housing market and I’m excited about it, but I have to say that I’ve given up wishing upon a star for this economy.

Hobson: Diane Swonk, chief economist with Mesirow Financial, let’s hope we can get your wishful thinking back soon. Thank you so much.

Swonk: Thank you.

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