Economy Watch: Unemployment Claims Bounce Back Upward; CEOs, JP Morgan Fiscal-Cliff Wary
By Dees Stribling, Contributing Editor
Proving itself to be the volatile indicator that it’s frequently asserted to be, the number of initial unemployment claims spiked upward for the week ending October 13 to 388,000, according to the U.S. Department of Labor on Thursday. The previous week’s claims were also revised upward a bit to 342,000. The four-week moving average, which isn’t so volatile, was up only 750 to 365,500.
Also on Thursday, the Conference Board reported that its Leading Economic Index for the U.S. increased 0.6 percent in September to 95.9 (2004 = 100). That followed a 0.4 percent decline in August, and a 0.4 percent increase in July, so “bouncing around” might be a fair characterization of the index in mid-2012.
“The U.S. LEI increased in September, more than offsetting the decline in August,” Ataman Ozyildirim, economist at the Conference Board, said in a statement. “The LEI has been signaling an economy that is fluctuating around a slow-growth trend. The six-month growth rate has slowed substantially, but still remains in growth territory due to positive contributions from the housing and financial components.”
CEOs Worry About Fiscal Cliff
No U.S. politician is paying much attention to the fiscal cliff at the moment, considering that the election is dead ahead, so the nation’s moneymen decided to nag the politicos about the situation on Thursday. The Financial Services Forum, which represents the C-suites of the largest banks and other financial service firms in the country, sent an open letter to President Obama and Congress.
The gist of the letter was a warning that the U.S. would see another downgrade to its credit rating if no deal was reached to avert the cliff. Also, it warned of another recession. “The consequences for inaction — for stability in global financial markets — for economic growth, for millions of Americans still without work, and for the financial circumstances of American businesses and households — would be very grave,” the letter stated.
The money panjandrums also asserted that merely avoiding the cliff isn’t enough. They call called for longer-term fixes to the nation’s fiscal problems. Their letter did not, however, articulate any specific positions on exactly what kind of action the government should take, either in the short- or longer term.
JP Morgan Says Watch for That Cliff
JP Morgan, for its part, said in a research note that it’s now estimating that the cliff–if unresolved–will pare 1 percent off GDP growth in 2013. That’s up from a previous estimate of a 0.5 percent haircut for the nation’s GDP. The banking giant is also predicting GDP growth in the first quarter of 2013 at 1 percent, and 1.5 percent during the second quarter.
Wall Street had a down day on Thursday, with the Nasdaq taking more of a beating perhaps because of irregularities in reporting Google’s underwhelming results. The Dow Jones Industrial Average lost 8.06 points, or only 0.06 percent, while the S&P 500 lost 0.24 percent. The Nasdaq, however, was down a full 1.01 percent.