All the bears on the economy have been telling the rest of us to keep a close eye on jobless claims. If they start risingprobably driven by spillover from the weak housing market, the theory goesthat will be an important sign that the labor market is weakening. And if the labor market is weakening, so eventually will consumer spending. Thus, a recession is nigh. But today's data from the Labor Department show initial jobless claims fell 12,000 to 318,000 for the week ending March 10down from a peak of 359,000 in early February. That drop provides a nice piece of evidence that the February surge in jobless claims was indeed weather related and not a sign of an increasingly weak job market. As the econ team at Action Economics puts it:
"Today's claims drop fully reverses the elevated levels of February, and helps to reinforce the weather explanation for the ugly round of economic reports for the month. ... Our March nonfarm payroll estimate sits at 160K, following the payroll undershoots of 97K in February and 111K in January, but overshoots in November and December of 196K and 206K, respectively. Our March estimate falls slightly below the 189K average payroll gain of 2006. Our estimate of initial payroll figures also incorporates the pattern of underreporting of the initial numbers, which we will assume remains in place until we see some reversal in this pattern."