The national unemployment rate has been falling faster that anyone expected it would. You can debate the numbers. For example, are we currently at 8.3 percent because the so-called "long-term unemployed" have given up and dropped out of the labor force altogether? Maybe. But there's no arguing other data, some of which is starting to look a lot better.
The number of Americans filing first-time claims for jobless benefits fell to a level matching a four-year low, more evidence the labor market is healing.
Applications for unemployment insurance decreased 2,000 in the week ended Feb. 25 to 351,000, Labor Department figures showed today. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls fell, while those getting extended payments also declined.
The four-week moving average, a less-volatile measure, fell to 354,000, also the lowest since March 2008, from 359,500.
In March 2008, the unemployment rate was a 5.1 percent, which is notably lower than the historical U.S. average of 5.9 percent. Spring of 2008, of course, was before the financial crisis kicked in with real violence. So we don't want to get too excited. But it's not inconceivable, given the falling pace of firings and layoffs, that employers will start to hire again, in anticipation of improving demand in 2012. The last thing you want to have happen as a business owners is get stranded with too few workers when an economy really picks up.
So will we see the unemployment rate fall below 8 percent, when the BLS numbers for February come in next week? I think it's a possibility, given that a lot of economic data is surpassing expectations right now. GDP, for example, hit 3 percent in the fourth quarter of last year. Now, if it were running at 5 percent, unemployment would be dropping like a rock.
But what we went through, and are still going through to a degree, during the financial crisis was a credit crunch, and these things take forever to unwind. So instead of unemployment rapidly falling, as it would after a "normal" recession, we're watching it being slowly, slowly ground down. Although so far in 2012, the grinding is happneing just a bit faster.
For what it's worth, this is all good news for California. Our unemployment rate is much higher than the national level, at 11.2 percent. Anything that closes that gap is welcome at this juncture.