Initial Claims for Unemployment Insurance and the Trade Deficit Both Increase

Mark Thoma at Maximum Utility has conclusions on the figures for creation of jobs and trend in trade deficits: (reposted with permission of the author)

Figures on the trade balance and new claims for unemployment insurance are out this morning, and the news isn’t as good as hoped. First, initial claims increased:

In the week ending March 5, the advance figure for seasonally adjusted initial claims was 397,000, an increase of 26,000 from the previous week’s revised figure of 371,000. The 4-week moving average was 392,250, an increase of 3,000 from the previous week’s revised average of 389,250.

This level of claims, around 400,000, is near the breakeven point between a job market that is creating jobs, and one where jobs are being lost. Thus, these figures, combined with the figures over the last several releases embedded in the four-week average show a job market that is struggling to provide enough jobs just to keep up with population growth, let alone recover the millions of jobs lost during the recession. The trend for claims is in the right direction, and more generally job markets do appear to be improving, but the improvement is frustratingly slow. We need the recovery to accelerate substantially if we are going to get back to full employment in a reasonable amount of time.

Second, the trade deficit increased to $46.3 billion in January, an increase of around $6 billion:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total January exports of $167.7 billion and imports of $214.1 billion resulted in a goods and services deficit of $46.3 billion, up from $40.3 billion in December, revised. January exports were $4.4 billion more than December exports of $163.3 billion. January imports were $10.5 billion more than December imports of $203.6 billion.

The jump in the trade deficit exceeded expectations, and was partly due to higher energy prices. In addition, the trade deficit with China increased by 12.5% to a little over $23 billion.

Some have pointed to increased exports and a reduction in the trade balance as one of the keys to recovery. A reduction in the deficit at the end of the last year provided some hope that this was happening, but this report throws cold water on those hopes. And, to make it worse, if energy prices go up any further the foreign sector is likely to pose a drag on an already much too slow recovery.