Jobless benefit claims fall sharply. GDP growth for 4th quarter slightly better than first report

High volatility continued for another week in numbers of Americans seeking unemployment compensation, the Department of Labor reported Thursday.  For the week ending Feb. 23, seasonally adjusted first-time claims for compensation fell to 344,000, down 22,000 from the revised figure of 366,000 in the previous week, originally reported as 362,000. The claims were more than four percent below the median forecast by economic experts surveyed by Bloomberg earlier in the week.

Despite the roller-coaster look of week-to-week claims applications, the trend overall is down from a year ago.  For the comparable week a year ago, claims were 373,000. Analysts put more stock in the four-week running average that smooths out some of the volatility in the weekly numbers. That number decreased to 6,250, from 355,000 the previous week.

For both state and federal emergency programs, the total number of Americans claiming benefits for the week ending Feb. 9 was 5,764,168. That was an increase of 183,841 over the previous week. Of that total, states reported that 2,005,991 people were receiving benefits as a result of emergency extensions first passed by Congress in 2009 and most recently renewed (at the last minute) in December. For the comparable week of 2012, there were 7,498,600 persons claiming benefits in all programs. That reflects both growth in jobs and the fact that many of those eligible for benefits have exhausted them. Three years ago, more than 70 percent of out-of-work Americans were receiving benefits; now less than 40 percent are.

Meanwhile, in the second of three monthly reports, the Bureau of Economic Analysis said Thursday that inflation-adjusted growth in gross domestic product in the fourth quarter of 2012 was 0.1 percent. That was a slight improvement over the minus 0.1 percent the BEA had calculated in last month's first report of the quarter's performance. The third and final GDP report for the fourth quarter comes in March, although additional adjustments in GDP calculations may be made in the coming year as better data become available.

The BEA said the drop in real GDP growth in the fourth quarter ' as compared to a 3.1 percent rise in the third quarter ' was primarily a reflection of downturns in private inventory investment, in federal government spending (particularly in defense), in exports, and in state and local government spending. These were "partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in [personal consumption expenditures]."

As I always point out, GDP is the most complete measure of all goods and services. But its flaws have long been acknowledged. As Robert F. Kennedy said in 1968: GDP "measures everything, in short, except that which makes life worthwhile." GDP leaves out things such as income inequality, the intensity of poverty, economic security, crime costs, the economic value of civic and voluntary work, the economic value of unpaid housework and child care, educational attainment and life expectancy. It's a measure that assigns zero value to leisure time, to the depletion of mineral and other natural resources, to the benefits of saving, to trade imbalances, to deficits and debt.

These flaws have generated efforts to develop a better gauge or at least supplements to it. These include France's Commission on the Measurement of Economic Performance and Social Progress, Canada's Genuine Progress Index (a version of which has recently been tried out in Maryland), the Human Development Index and the  Gini coefficient.

Despite the looming sequester of federal spending, other economic data released this past week have been generally positive, particularly in the housing market where sales of new homes have risen considerably more than analysts had expected, although they are far below the pre-recession peak. That peak, however, was an unsustainable bubble. Consumer confidence for February, as measured by the Conference Board, rose by more than 10 points after the deep hit it took in January over the rise in payroll taxes.