Leading economic indicators and the stock market are up, but jobs remain depressed and therein lies the rub.
Today, the Conference Board, a private group of economic forecasters, said its index of leading economic indicators rose 1 percent in September after a 0.4 percent gain in August. That’s six months in a row that the board’s index has risen. It’s a good sign but not good enough.
“With the sixth consecutive increase, the LEI’s six-month growth rate has improved to its highest pace since 1983,” says Ataman Ozyildirim, an economist at The Conference Board. “Except for average workweek and building permits, all the leading indicators contributed positively to the index this month. At the same time, the contraction in the coincident economic index has halted in recent months, but the continued downtrend in employment is keeping this index of current economic conditions from rising faster.”
Joblessness remains high, with new claims for unemployment benefits rising by 11,000 last week, according to the Labor Department, a number that was higher than expected. Economists surveyed by Down Jones Newswire over the past week only expected claims to rise by 4,000.
It’s not all bad news in the job sector, however: according to the Wall Street Journal, “the four-week moving average of new claims … dropped slightly by 750 to 532,250 from the previous week’s revised figure of 533,000. That is the lowest level since Jan. 17.”
Moreover, the Labor Department reported today (Thursday, Oct. 22) that the number of people drawing unemployment fell by 98,000 in the week ended Oct. 10 to 5.923 million. That’s the lowest number since March 28, says the Journal. Still, some of that number appears to be people who can no longer draw unemployment because their benefits have been exhausted.
Former U.S. Treasury Secretary and senior White House aide Lawrence Summers tried to sound an optimistic note at the Reuters Washington Summit on Wednesday (Oct. 21), but also knows that jobs are necessary for any real recovery.
“It will be some time before unemployment starts to decline. Once it declines, it will take a long time to return to normal levels, given how elevated it is,” he said. Reuters noted that the jobless rate remains at a 26-year-high of 9.8 percent.
“The question of what will propel growth throughout the expansion is still a crucial one,” Summers added. “But that’s always the case at the beginning of expansions.”