Thursday, July 29, 2010

Unemployment insurance initial claims remain semi-elevated, indicating job market is mixed

Although technically the economy is probably no longer in a formal recession, the job market is barely limping along. The latest weekly unemployment insurance report shows that both initial claims and continuing claims remain elevated, not at the level we saw in the recession, but still not back down to the levels expected in a normal, healthy economy.

I think the biggest issue on the jobs front is that state and local governments are struggling mightily, laying off workers, putting more workers on furloughs, and reducing spending which causes vendors to cut jobs on their side of the fence as well. The corporate job market is doing "okay", but the non-federal government "squeeze" is mostly offsetting the pockets of strength on the corporate side.

The bottom line is that companies have enough cash and excess capacity to grow the economy (the primary measure of whether we are in a recession or not) without necessarily needing to hire a lot more workers. Meanwhile, bloated non-federal governments still need to downsize to a more realistic view of the economic environment going forward. The job market will continue to slowly recover, but only very slowly.

-- Jack Krupansky

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