How Bad Is the Unexpected Rise in Joblessness?

Claims rose despite predictions of a drop

The number of people signing up for unemployment benefits increased by 25,000 last week to 471,000 despite general predictions that the number of claims would drop by 4,000. Here's what economists and writers are making of the bad economic news.

• Context Behind The Numbers  MarketWatch's Jeffry Bartash reports, "The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - rose by 3,000 to 453,500. Economists surveyed by MarketWatch predicted initial claims would drop to a seasonally adjusted 440,000 from last week's reading of 446,000. A Labor Department official said there were no unusual factors to explain the increase."

• What That Means For Recovery  The Washington Post's Frank Ahrens explains, "Economists say that substantial new job creation won't happen until the new weekly jobless claims number gets down into the low 400,000s or upper 300,000s and stays there. Right now, it remains frustratingly stuck in the mid-400,000s. The number of continuing claims -- the long-term unemployed -- actually dropped last week to 4.63 million from 4.67 million the week before, so that's a bit of good news."

• Is GDP Next?  24/7 Wall Street's Douglas McIntyre worries, "High unemployment, lack of credit availability for small businesses and consumers, and slow wage growth may have caught up to an American economy which has been on the mend since late 2009. ... It is another sign that the recovery may not be sustainable if joblessness does not improve quickly and the trouble in Europe saps demand for US exports."

• No V-Shaped Recovery For Us  Economics blogger Brad DeLong sighs, "There is no statistical evidence that a V-shaped recovery is coming. And each anecdote showing strength above the average story told by the macroeconomic aggregates is balanced by another anecdote showing weakness below the average story stold by the macroeconomic aggregates: that is, after all, why the average is the average--it is the average. And the average does not look like a 'V' at all." He provides some very discouraging graphs.

• Lots of Bad Economic News Piling Up  The Atlantic's Meghan McArdle is not optimistic.

All of this raises the possibility of the dread "double dip" recession.  Worse, that recession was expected to come (if it did) when fiscal and monetary stimulus were withdrawn--not when a peripheral member of the eurozone ran out of borrowed money.  The parallels to the Great Depression are not perfect . . . but they're certainly uncomfortable.  And if we do double-dip now, there's a good possibility that we'll eventually triple-dip, because all that extra money does have to be mopped off at some point.