A SLIGHT RAY OF LIGHT – AT 8:48 A.M. ET:  Rarely do we get any good economic news, and this bulletin has to be viewed cautiously, but at least one number is heading in the right direction...at least for a week.  From Bloomberg:

Applications for unemployment benefits dropped last week to the lowest level since April, a sign the weakness in the labor market is abating.

Jobless claims fell by 24,000 to 398,000 in the week ended July 23, fewer than forecast, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000. There were no special factors associated with the decrease other than the usual volatility that occurs each year in July, a Labor Department spokesman said.

Many economists believe that the number must fall below 400,000 for any real jobs progress to be possible.  It did this week, but I wouldn't break out the champagne.  We'd have to see a trend over a period of weeks, or months.

A reduction in firings is a necessary step toward the point when employers are more willing to add workers. The lack of hiring means the unemployment rate will probably keep hovering near 9 percent, restraining consumer spending, which accounts for about 70 percent of the economy.

COMMENT:  The administration will probably gloat a bit about this slight improvement, but with the strong possibility that the credit rating of the U.S. will be downgraded, the Obamans might try to be careful about making claims. Downgrading would produce substantial uncertainty in the economy, to add to the uncertainty already there, and uncertainty means further job losses.

July 28, 2011