Jobless-claims data improves significantly

Jonathan had a good post about this yesterday, but I have a chart to publish, so I hope readers won’t mind two items on the same subject.

The number of Americans who filed requests for jobless benefits fell sharply last week to the lowest level since May 2008, indicating that a fragile U.S. labor market continues to heal.

First-time applications for unemployment compensation declined by 19,000 to a seasonally adjusted 366,000, putting claims at the lowest level since the middle of the 2007-2009 recession.

Economists surveyed by MarketWatch had projected that claims would rise to a seasonally adjusted 390,000 in the week ended Dec. 10. Claims from two weeks ago were revised up to 385,000 from 381,000.

“You have to be careful about reading too much into any one week of data, but it’s very encouraging,” said economist Andrew Grantham at CIBC World Markets. “Companies are pushing off concerns about the rest of the world and are more confident about their own prospects.”

If Europe weren’t poised to undermine the global economy, there might even be some grounds for optimism.

As a general rule, national job creation is improving when jobless claims fall below the 400,000 threshold. As of the Labor Department report published yesterday, we’re down to 366,000 — a figure unseen in more than three-and-a-half years.

And with that, here’s the new homemade chart, showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I’ve added an arrow to show the point at which President Obama’s Recovery Act began spending money.