Surprising Drop In Unemployment Claims

Unemployment insurance claims last week fell to a four-month low, an unexpected bit of bright news in a gloomy economy. According to the United States Department of Labor, there were 395,000 initial payment claims, which marked a 7 percent decrease over the previous week’s number of 402,000.

The total number of people claiming benefits for the week ending July 23 was nearly 7.48 million, which was a decrease of nearly 90,000 from the week before. Bloomberg hypothesized that the surprising dip in claims was due to a lack of hiring instead of more firings.

“We don’t see any more deterioration in the labor market,” Eric Green, chief market economist at TD Securities Inc., told the news source. “I don’t see any panic among businesses to shed workers, but you have some reluctance to hire workers.”

However, companies’ reluctance to hire and last week’s credit downgrade are still weighing heavily on consumer spending. And those who are employed still aren’t faring well. According to a recent Reuters report, personal incomes are down 15.2 percent from 2007 and the number of homes reporting no earnings has increased by 4.2 million since 2007.