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Thursday, December 13, 2012

Jobless claims take huge tumble to lowest level in 4 years, but ...

The initial weekly jobless claims number came in at a fairly surprising 343,000 - a drastic drop from last week's roughly 370,000. If it stays at that level for any considerable amount of time, that would suggest a drastic increase in hiring is just around the corner.

But here's the caveat I've been giving out every week recently:

The data still might be affected by the aftermath of Superstorm Sandy. Maybe that's why they have been so volatile. (The usually less-volatile 4-week average came in at about 380,000.) After the storm, the claims initially jumped to above 430,000. Had it stayed there, that would have suggested a major slowdown in hiring. Of course, it didn't stay there. It eventually drifted back to 372,000 last week. Economists had expected them to come in at between 370,000 to 380,000 this week - which is why the 343,000 is such a surprise.

Marketwatch has this explanation for the number and explains why economists believe it will still be mid-January before the claims are reliable forward-looking indicators again. It's always better to see the claims drop than rise. But I'll take this report with a grain of salt until there is evidence that it can be sustained.

The good news is that gas prices are supposed to drift even lower in the coming weeks, which will also help spending in the broader economy. A strong November retail sales report was released this morning as well. That makes the "fiscal cliff" results even more important.

Economists believe there is room for growth and stability in the economy in 2013 - but that can be derailed if things go wrong in Washington.

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