The latest weekly jobless claims data seemed dull enough, however, it masks a troubling situation that could blow up for millions of Americans in 2012. The continued heavy flow into the jobless pool reflects an environment where jobs are still hard to get. With Congress unable to pass the President’s Jobs Bill this week, some 6 million Americans could soon be disconnected from the government aid that has so far sustained them; and an inhospitable labor market awaits them.
For the week ending October 8, weekly jobless claims eased by 1,000, but remained at an unhealthy level of 404K. The four-week moving average illustrates the troubling malaise in labor, as the claims average sits at an even higher 408K. In my view, while the flow of benefits filers sits above the 300K level, it depicts a labor market where the odds are stacked against job seekers. Meanwhile, an increasing number of economists are forecasting either recession or a slower rate of economic growth for 2012, and higher unemployment to complement that. Earlier this month, Goldman Sachs (NYSE: GS) cut its global and U.S. economic view, joining J.P. Morgan (NYSE: JPM) and others.
This past week probably raised the blood pressure of some 6 million Americans who will lose their unemployment extension benefits in 2012 if Congress does not pass new legislation to counter the eventuality. Some 1.8 million Americans are estimated to see their last checks in December or January, according to figures from the National Employment Law Project. Those struggling souls will then be shed, desperate and alone, into a job market that remains inhospitable to them especially because of their long length of unemployment.
In recent articles, I’ve discussed the erosion out of the insured unemployed pool, which is a phenomenon that I suspect could be engineered, or more likely the result of a system that is too strict to rule, and disqualifies unemployed Americans from their benefits quickly and cleanly. Over time, strict rule may be what is needed to inspire the unemployment rate to contract more deeply, but I believe that time is not today.
Week after week, we see the insured unemployed count decline. The latest Jobless Claims Report shows that some 55K Americans left in the week ending October 1. With regard to the larger pool of Americans receiving any sort of unemployment benefit under all programs, the number dropped by 39,203 in the week ending September 24, to a still high 6.8 million Americans. Many of these folks are receiving unemployment benefits through the extension legislation which will expire at the close of the year. The expiration of the legislation does not equate to the expiration of benefits to all, as that depends on when each person saw their regular benefits expire.
I should clarify that the failure to pass President Obama’s ambitious American Jobs Act does not mean extension benefits are doomed. Congress is now looking toward the piecemeal passage of components of the Act, which includes the continuation of the extensions program.
The latest Weekly Jobless Claims Report and the trend in jobless claims and in American unemployment should provide the clear evidence needed for legislators to extend the extension program. In my view, politics should not get in the way of this important program for hard working Americans who simply have no opportunity for work. Unless legislators want to see the Occupy Wall Street movement at their office doors, they would be wise to pass it quickly and without political hoopla.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.