According to the United States Department of Labor, new unemployment claims dropped unexpectedly by 6,000 last week to 367,000. This, along with the news that the economy added 163,000 jobs in July, suggests the economic recovery can be sustained.
If applications fall below 375,000, it suggests a more stable job market. Paul Dales, senior U.S. economist at Capital Economics, said, “The pick-up in jobs growth in July may therefore be sustained in August.”
“Today’s report is a mild positive for the labor market,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, in an e-mail to clients. “Assuming we do not see a large uptick in claims over the next two weeks, we would expect August payroll growth to at least match that of July, if not exceed it.”
However, one can well imagine that the Mitt Romney campaign and GOP will dispute the report’s data and deny that a modest recovery is underway. They do have some rhetorical ammunition when it comes to the unemployment rate, which rose from 8.2% to 8.3% in July.
Clearly it’s a wait and see type of economic environment, but at least there is some positive news in the US economy—at least on the stock market. But if both presidential candidates want to create an economic surge, they need to seriously talk about cutting taxes for the middle class and small businesses. Low corporate taxes are doing absolutely nothing for the economy.
That and the candidates need to talk about seriously cutting the defense budget, which hovers around $1 trillion annually—a budget paid for largely through middle class tax dollars.