Posted on: Thursday, January 1, 2004

Jobless claims hit 3-year low

By Jeannine Aversa
Associated Press

WASHINGTON — The number of people filing new claims for jobless benefits last week dropped to the lowest level in nearly three years, a dose of good news for President Bush who wants the economy on firm footing as he heads into his re-election campaign.

The Labor Department reported yesterday that new applications filed for unemployment insurance dropped by a seasonally adjusted 15,000 to 339,000 for the week ending Dec. 27. Last week's drop marked the third week in a row that claims fell, and left claims at their lowest level since Jan. 20, 2001 — Bush's inauguration day.

Claims have been below 400,000 for 13 consecutive weeks, something economists view as a sign that the fragile labor market may be turning a corner.

The latest snapshot of the labor market suggested that America's businesses are feeling more confident that the economic recovery is genuine, and thus are less inclined to hand out pink slips to workers, economists said.

"It is encouraging that this final piece of the puzzle — the labor market — may be falling into place. It's a great economic note to end the year on," said Richard Yamarone, economist with Argus Research Corp.

New claims hit a high this year of 459,000 in the middle of April and have slowly declined, a development cited by Federal Reserve Chairman Alan Greenspan and other economists who say the pace of layoffs is stabilizing.

The more stable four-week average of claims, which smooths out weekly fluctuations, decreased last week by 6,500 to 355,750, the lowest level since Feb. 10, 2001.

The labor market has displayed other signs of improvement in recent months. The nation's unemployment rate stands at 5.9 percent — down from a high this summer of 6.4 percent. Still, job growth has been painfully slow, making life difficult for job seekers.

Since Bush took office, the economy has lost 2.3 million jobs, a development that Democrats hope to use against the president as he seeks re-election in November. The Bush administration contends that stronger economic growth — helped by the president's three tax cuts — will eventually lead to more meaningful job creation on a sustained basis.

The proportion of workers who have been without a job for more than six months hit 24 percent in November, a 20-year high, which Bush's Democratic opponents contend is evidence of the president's mishandling of the economy.

Although Sen. Joe Lieberman, D-Conn., called the drop in jobless claims good news, he added "there's too much evidence that the economy is on a sugar high — not at the start of a healthy, long-term growth spurt. Job growth is slow, consumer confidence is sagging and George W. Bush has yet to put forward a plan for long-term growth."

Lieberman said as president he would cut taxes for the middle class, give businesses incentives to create new jobs and invest in education and innovation.

Yesterday's report also showed that the number of unemployed people collecting jobless benefits for more than a week rose by 81,000 to 3.3 million for the week ending Dec. 20, the most recent period for which that information is available. This suggests that jobs are still hard to find for some workers.

The uncertain job climate is on Americans' minds.

Consumer confidence dipped in December amid anxiety about the job market, the Conference Board reported Tuesday. The board's consumer confidence index slipped to 91.3 in December, following a surge in November to 92.5, its highest level in more than a year.

Economists believe the labor market will be the last part of the economy to recover even as the economy expands solidly.

The economy grew at a breakneck 8.2 percent annual rate in the third quarter. Analysts believe the economy slowed to a growth rate in the range of around 4 percent or 5 percent in the current quarter, which would still mark a solid showing.

Economists think that as companies' profits improve they will feel more comfortable about ramping up investment and hiring.