The economy might be picking up steam, as the latest report on weekly jobless claims showed a seven-year low and state tax revenues for 2013 hit record highs. But it remains to be seen if that momentum will continue as consumers and employers emerge from winter hibernation.
Only 300,000 Americans sought unemployment insurance during the week ending April 5, a decrease of 32,000 from the previous week, according to the Labor Department.
“The last time initial claims were this low was May 12, 2007 when they were 297,000,” the report said.
The department’s four-week moving average on new unemployment claims, which is more stable than the weekly report, also dropped to 316,250, the smallest amount in more than six months. Companies are also trying to fill the largest number of positions since January 2008, as private sector job openings climbed to approximately 4.2 million in February, rising from approximately 3.9 million in January of this year, the Labor Department reported.
The Federal Reserve in March determined that bad winter weather was the main factor for slower economic growth and job creation so far this year, so spring data will give a better signal of the economy's health.
Economic recovery is also refilling state coffers, as the Census Bureau reported that state taxes hit a record high of $846 billion in 2013, an increase of 6.1 percent compared to 2012 and an indication that employment growth is fueling higher income tax payouts.
Employment is headed in the right direction, but it will take more data to know for certain whether the recovery is heading into high gear, says Mark Hamrick, Washington bureau chief of Bankrate Inc., a consumer finance company.
“Personal income taxes make up about a third of total state taxes, so incomes are slowly rising,” Hamrick says. “This has tended to be a two steps forward, one step back recovery.”
That cautious optimism is important to keep in mind with the stock market, which has been on a roller-coaster of dips and spurts this past week, says Brad McMillan, chief investment officer for Commonwealth Financial. Wall Street has been in one of the longest bull markets in history, but 12 corrections have occurred since 2009 to release steam on prices and keep the market from overheating and leading to a crash.
I am not yet worried about the markets, I do feel that the yellow light is
getting brighter with each iteration of up and down,” McMillan says.