It's early yet to lose sleep over the job market's one-step-forward, one-step-back routine. Even so, the latest pivot is eye-opening.
A government report out Thursday showed initial claims for unemployment insurance rose 10% from the previous week to an eight-month high. Because the number is weekly, economists tend to take initial claims with a light sprinkling of salt – particularly in a week featuring tornadoes and Japan-related auto industry bottlenecks.
Even so, a look at the four-week moving average of weekly claims (see chart, right) shows the economy has at the very least hit a bump and, perhaps, is running out of $4 gas. With the Fed preparing to take its foot off the monetary accelerator next month, it's a trend that bears watching.
"Looking at these numbers, I would be a little concerned," says Northern Trust economist Asha Bangalore. "It seems to me we have been seeing some less optimistic trends the last few months."
Indeed, since bottoming out at 388,000 in March the four-week moving average of initial claims has rebounded to a recent 431,000. That's the highest level since Thanksgiving, though it's well below the year-ago level of 469,000.
The turnaround is noteworthy because initial claims are "the granddaddy of all leading indicators," says former Lehman Brothers trader Lawrence McDonald. "When claims were falling, the bulls were really embracing that number as an important sign."
The weekly jobless claims are merely a warmup for Friday's main event, the Labor Department's monthly employment report. Economists expect to see the United States add something on the order of 200,000 private sector jobs in April, along the way to what most see as a trend that will push unemployment down to a still high 8% by year-end, from a recent 8.8%.
Even if Friday's numbers come in softer than expected, most observers will simply chalk it up to the ups and down of a weak recovery in an economy that remains overloaded with debt. But it won't take many bad months to get Bernanke's attention.
"Business in sectors with below average growth in demand lay off workers, which results in reduced spending and further layoffs," said the bowtied University of Maryland economist Peter Morici. "Such a negative cycle would result in second recession."
While Bernanke hasn't said he would do anything to avoid a second recession, it's widely assumed he will go to some lengths to keep the jobless rate coming down -- though maybe not immediately. The political beating he took over the Fed's second round of bond buying, due to end next month, dictates that the Fed probably won't even consider such a plan till next year.
Even that will be too soon for the many skeptics of the policy. "QE3 is just stupid," says McDonald. "It doesn't get money into the economy."
But with Washington gridlocked and QE2 at least temporarily having made the economy look a little ruddier, you'd be a fool to rule it out.
Also on Fortune.com:
Follow me on Twitter @ColinCBarr.
The latest unemployment report shows that women continue to maintain a more stable unemployment rate than men. As the economy recovers, they may continue to dominate.
It's no secret that women fared better than men during the latest recession. More men found themselves unemployed than women as male-dominated industries such as construction and manufacturing shed far more jobs than areas like education and health care, which typically employ more women.
And MORENin-Hai Tseng, Writer - Oct 8, 2010 12:52 PM ET
Generally employers hire more employees to boost productivity. There are reasons why, despite dropping productivity numbers, it's not happening this time around.
The latest recession forced many U.S. companies to cut costs and run leaner businesses. Executives dramatically slashed headcount and even held off on replacing old and aging equipment, software and other capital. The measures generally worked for a while, but the recent unexpected dip in U.S. productivity has MORENin-Hai Tseng, Writer - Sep 22, 2010 3:00 AM ET
The past two weeks have delivered some good news on the unemployment front. But the devil is in the details, and the details suggest that no hiring frenzy is imminent.
With the U.S. jobless rate at an unnervingly high 9.6%, the unemployment statistics released by the Labor Department have never been more closely watched as an economic indicator.
These statistics get most people – even some Wall Street bank analysts – MORENin-Hai Tseng, Writer - Sep 13, 2010 3:00 AM ET
|4 federal agencies to shut Friday|
|Wall Street braces for China and Fed fallout|
|Japan plunge spooks global markets|
|Shazam overhauls iPad app as music market heats up|
|Bitcoin more powerful than fastest supercomputers|