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U.S. jobless claims fall
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January 10, 2002: 10:59 a.m. ET
But first recession in a decade continues to weigh on the labor market.
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NEW YORK (CNN/Money) - New jobless claims fell in the United States last week, the government said Thursday, though the economy's first recession in a decade continued to have an impact on the labor market.
The number of Americans filing for unemployment benefits fell by 56,000 to 395,000 in the week ended Jan. 5 from an upwardly revised 451,000 the prior week, the Labor Department reported. Economists surveyed by Briefing.com expected 420,000 new claims.
"It certainly looks like [new claims] have peaked," Maureen Allyn, chief economist at Zurich Scudder Investments, told CNNfn's Before Hours program. "You're looking at several weeks where they've come off the peak they hit after Sept. 11."
The four-week moving average of new weekly claims, which smoothes fluctuations in the weekly data, dipped slightly to 410,500 last week from a revised 410,750 in the prior week.
And continuing claims -- the number of people drawing benefits for more than a week -- fell to 3.53 million in the week ended Dec. 22, the latest week of available data, from a revised 3.70 million the prior week.
Separately, the Commerce Department reported that wholesale inventories fell 1.1 percent in November to $290.4 billion after falling a revised 1.2 percent in October.
The data had little impact on Wall Street; U.S. stock prices fell in early trading, while Treasury bond prices rose.
More than a million Americans have lost their jobs during a recession that apparently began in March, according to the National Bureau of Economic Research. The unemployment rate has risen to 5.8 percent, the highest since May 1995, and ordinarily keeps climbing even as the economy recovers.
"After the last recession, unemployment went up 15 months after we came out of recession," Allyn pointed out. "It felt like no jobs were being created at all for a year after the economy was recovering."
Just this week, in fact, No. 1 U.S. automaker General Motors Corp. (GM: down $0.61 to $49.63, Research, Estimates) announced it was cutting more than 5,000 jobs, No. 2 automaker Ford Motor Corp. (F: down $1.01 to $15.30, Research, Estimates) is expected to cut possibly 10,000 jobs and No. 1 U.S. brokerage Merrill Lynch & Co. (MER: up $0.46 to $58.45, Research, Estimates) announced it was cutting about 9,000 jobs.
"I'm surprised we're seeing this little amount of [weekly claims] because we keep hearing the announcements," Allyn said. "There have to be more layoffs in the pipeline."
To keep consumers spending despite the ever-weakening labor market, the Federal Reserve cut its target for short-term interest rates 11 times in 2001 to levels not seen in 40 years.
Recent signs of stabilization in the long-suffering manufacturing sector, consumer confidence and other aspects of the economy have convinced many economists that the Fed will leave rates alone after its next policy meeting, scheduled for Jan. 29-30.
Click here for CNN/Money's economic calendar
Fed Chairman Alan Greenspan is scheduled on Thursday and Friday to speak publicly for the first time since October. Though he will almost certainly not reveal the likely course of monetary policy, he will discuss the state of the economy on Friday. Investors will pay close attention to his diagnosis, especially since other Fed officials speaking this week have indicated they're not entirely convinced a roaring recovery is right around the corner.
Greenspan and other policy makers have kept a close eye on the manufacturing sector and its inventory glut. Thursday's report that inventories shrank again in November is surely a good sign. Once the stock of unsold goods is eliminated, manufacturers will be free to increase production and hire more workers.
Less encouraging have been retail sales for December. While discount chains continued to benefit from consumer caution, traditional department stores and specialty shops suffered. 
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