Initial jobless claims fell a huge 47,000 in the week ending July 11 to 522,000. In the prior week they dropped 48,000, according to the U.S. Labor Department. So that’s a giant 95,000 drop in just two weeks, bringing the four-week moving average down to 585,000.
If you buy into these numbers, the long march toward big job losses and soaring unemployment may soon be coming to an end. Veteran Wall Street economist Robert Sinche believes unemployment will peak below 10 percent. He bases this on the sinking jobless claims that are a key leading indicator of the jobs market.
Some, however, think the recent claims data are massively distorted by the shift in timing of summer shutdowns in the auto industry. The collapse of GM and Chrysler pulled this summer’s layoffs -- and then some -- into the spring. This is the view of John Ryding and Conrad DeQuadros.
We won’t know how reliable these initial jobless claims data are until we get into August. I myself am still concerned about the dismal June jobs report and the implication for sinking incomes. So I remain cautious. But perhaps the clouds are parting more than I think. Even permabear Nouriel Roubini is saying the recession will end by year-end.
And stocks are certainly signaling a change for the better: The Dow is up another 100 points as this week’s gigantic rally continues to roll, led by banks and tech.
CIT is not too big to fail -- it’s going into bankruptcy and the market is applauding. And Henry Paulson’s testimony on the Bank of America/Merrill deal has been well received on Wall Street. Both Republicans and Democrats on the investigating committee look like fools. Paulson basically told them, “You bet I put a gun to Ken Lewis’s head to complete the merger. We were in a crisis, and could have tipped over into the abyss.”
Essentially, Big Hank just stuck it to the politicians. He put the wood to Lewis and was right to do so. These flatfooted, tinhorn politicos in Washington look like fools. There’s no smoking gun. They’re looking for a needle in a haystack, and if they ever found it, it would be rusted and useless.
Paulson deserves a congressional medal of economic and financial honor, not this ridiculous witch-hunting-and-fishing expedition.
Take a look at the improving health of the financial system today and compare it to the dark days of last autumn. Not everything was perfect. It never is during wartime. But efforts by the Fed, the FDIC, and the Paulson Treasury helped save the system. Paulson’s a hero, not a goat.
Oh, and did I forget to mention that former Pres. George W. Bush, the man who appointed Paulson, signed off on the Treasury rescue operations and publicly took the heat for them? Of course, no one ever gives him any credit.
I’ll have more to say about this Paulson stuff in a forthcoming column. But suffice it to say stocks are very bullish today, and stocks are the best leading barometer of business and the economy.