Thursday brought better-than-expected readings for both weekly jobless claims and second-quarter gross domestic product growth, suggesting that, for now, the United States is warding off a double-dip recession.
Initial jobless claims for the week ending Sept. 24 declined sharply, dropping below the key 400,000 level economists say claims must fall below to dent unemployment. Claims fell to 391,000, down 37,000 from the previous week.
At the same time, the Commerce Department released its final reading for the second-quarter gross domestic product, which was revised upward to 1.3 percent (it was most recently reported at 1.0 percent). The improved reading was led by consumer, construction, and federal government spending as well as exports.
But while the news was good, it hardly changes the overall economic picture: Growth is weak and the labor market battered. The 4-week moving average for weekly jobless claims, a less volatile gauge of the labor market’s health, decreased by 5,250 but remained above 400,000 at 417,000. Federal Reserve Chairman Ben Bernanke, speaking in Cleveland on Wednesday, called unemployment a “national crisis.”
GDP growth is expected—though not assured—to pick up in the second half of the year, but not very much: The Office of Management and Budget projected in August that the U.S. economy will grow at a sluggish 1.7 percent rate in 2011, revised downward from a more-optimistic prediction of 2.7 percent in the beginning of the year.
This article appears in the September 29, 2011, edition of National Journal Daily PM Update.