Dec. 3, 2009 – 8:00 a.m. CT

Jobless Claims Continue to Fall While Ben Goes to Capitol Hill

In yet another sign that the pace of layoffs is moderating, jobless claims dipped to 457,000 in the most recent week, which included the Thanksgiving holiday. That is the lowest level in 14 months and getting close to a tipping point on employment. Hiring usually moves back into the black once claims approach the 400,000 threshold.

That said, unemployment is expected to remain stubbornly high, and the pace of job generation in 2010 muted. I must admit, I hope that I am wrong and surprised on the upside by employers' willingness to hire. When the monthly employment data is released tomorrow, we will be looking for increases in temporary employment and an increase in the workweek as precursors of a more substantive sign of a bottoming in the labor market.

Separately, Fed Chairman Ben Bernanke faces reappointment hearings today on Capitol Hill. He will no doubt be challenged to defend his efforts to stabilize markets last year, and defend his need for the ongoing independence of the Fed. This will be a difficult task, especially as we get closer to the 2010 election cycle. Those running for reelection would rather scapegoat the Fed than themselves (this is really unproductive, especially if Congress has any interest in defending the reserve currency status of the dollar).

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