The second estimate of fourth-quarter GDP for the U.S. shows that the economy eked out a small gain in the final three months of 2012. The 0.1% increase for Q4 is a slight improvement over the 0.1% decline in the initial report. But as revisions go, this one’s close to insignificant. By contrast, today’s weekly jobless claims update offers more encouraging news. Good thing, too, since claims offer a more-timely read on the macro trend for the near term.
The number of people filing for jobless benefits last week dropped 22,000 to a seasonally adjusted 344,000. As a result, claims are close to the cyclical low of 333,000 reached in mid-January 2013. The four-week moving average of claims also dipped last week, showing a modest bit of renewed momentum to the downside.
The year-over-year change in claims also posted a sizable drop in today's update. New claims fell 8% last week vs. the year-earlier level. That's a strong signal for anticipating that the labor market will continue to mint jobs on a net-positive basis for the foreseeable future.
If the weak Q4 GDP report is a harbinger of trouble for the economy in 2013, there are minimal signs of blowback in today's claims report. No one can rule out future turmoil, of course, particularly since the uncertainty of the government's scheduled budget cuts is set to start tomorrow and extend through the weeks (months?) ahead. Or will Congress intervene and soften the automatic cutting? Meantime, to the extent that jobless claims are a valuable leading indicator — and they are — there's a good case for expecting that next week's February report on U.S. payrolls (March 8) will deliver a familiar refrain for this key indicator: modest growth.