The key stat is this week's U.S. unemployment data. Continuing claims, which rose 159,000 to a record 4.78 million Americans.It was the highest continuing claims level since record keeping for the statistic began in 1967, the U.S. Labor Department announced Thursday.
Economists note that the high continuing claims level reflects labor market stress, and the long time it takes for those downsized to find comparable employment. Few companies are filling vacancies, many major corporations have announced large lay-offs, and even temporary work assignments are declining, another negative sign for the labor market.
Meanwhile, weekly jobless claims increased 3,000 to 588,000 for the week ended January 24. Further, weekly claims are now more than 80% higher than the same period a year ago.
Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 575,000. Claims for the previous week were revised to 585,000.
The impact of a rising continuing claims level on investors? Continuing claims reflect a market-based economy that's unable to absorb workers, which suggests an economy that's operating well below its productive capacity, with a smaller-than-preferred pool of consumers. That almost always means lower revenue and earnings for most corporations -- something that will weigh on the stock market.
Economic Analysis: Given the high level of continuing claims and the current pace of job losses, economist Peter Dawson said the best case scenario for the U.S. economy would be a recovery in revenue and earnings by Q3 or Q4 2009. Assuming the aforementioned, the unemployment rate, being a lag indicator, probably would not begin to recover until late 2009 / early 2010, he said. Underscoring, that's the best case scenario.
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