Initial weekly jobless claims jumped this week for the first time in a month, meaning they've moved from the almost-great to the just really-good stage. They settled in at 381,000. For several weeks, they have been in the below 400,000-range. (The four-week-moving average actually dropped again, which is another strong sign that overall the job market continues to move in the right direction.) The last time that happened was earlier this year in the spring when the economy was producing a net of more than 200,000 private sector jobs for three consecutive months. In fact, this recent run is actually better than that period, so there is real reason to believe next week's monthly jobless report should be positive. How positive is anybody's guess. Could the unemployment rate rise any way because there is a flood of people who re-enter the market? Could it drop even more because of better than-expected job growth? Who knows? We'll find out next Friday morning.
That 2011 spring jobs revival - which many people didn't really pay attention to - continued until bigger worries - the stupid fight over the debt ceiling that created unnecessary uncertainty, the Euro Zone was seemingly on the brink, the Arab Spring forced up oil prices, the Japanese tsunami put a major dent in an extremely important economy - forced the jobless claims back up to almost 480,000 and the job market seemed to come to a screeching halt along with economic growth overall. That convinced many economists that by the end of this year we'd be in the second part of a double dip recession. Fortunately, they were wrong.
They did not forecast the jobless rate falling to 8.6 percent so soon or the economy regaining strength, both of which has happened. Going forward, they remain fairly pessimistic and believe the economy won't grow a ton next year. Again, they were wrong about the double dip recession so we should hope they are going to be wrong again about 2012. But there is a growing worry, in addition to all of the other shocks from above, and that is what's going on with Iran. We are squeezing them pretty heavily because of our concern about them developing nuclear weapons, and they are threatening to respond by blocking a critical oil route. We've responded by saying we won't allow them to do that. All of which means that we may have some kind of confrontation with Iran in 2012, and that would change everything. Hopefully, that won't happen, but it could. It will have impact on the economy because it will impact oil prices, and my amateurish economic analysis relies upon only two numbers, gas prices and the initial jobless claims. If oil prices shoot up too high too fast and stay there for long, that would push up gas prices, which would hurt overall consumer spending, which would slow the economy and eventually the clearly-healing job market would be hurt as well. So for right now, things remain on track. We live in a world in which which global concerns - and not just U.S. policy and politics - help dictate the direction of the U.S. economy. And given that the poor housing market, a lingering relic of the Great Recession, still haunts us - housing usually helps pull us out of downturns but this time has been a drag on growth - that makes all of those global concerns just that more important.
