Jan. 28, 2010 – 7:40 a.m.

Glacial Improvement

Initial unemployment claims fell slightly to 470,000 – much less than expected and a disappointment for those holding their breath for a positive employment number in January. Indeed, we are not likely to see hiring outpace firing by a substantial margin until hiring for the 2010 census ramps up in March (e.g., healing in the labor markets continues at a glacial pace and any improvement that we do see is still heavily dependent on government support).

Separately, durable goods orders (factory orders) edged up at a less-than-expected 0.3%. Orders excluding defense and aircraft were significantly better, which will be a help for GDP in the first quarter.

Real GDP, which will be reported tomorrow, likely exceeded the 5% threshold in the fourth quarter. The economy, however, appears to have lost some momentum at the end of the year, and is slowing as we move into 2010. The recovery remains sub-par at best.

Bottom Line: Hopes for more bi-partisan politics may still be more of a pipe dream than a reality, at least until the mid-term 2010 elections have passed. Bad economies fuel even more rotten politicking, as both parties race to the depths of scapegoating and blame.

© 2010 Mesirow Financial Holdings, Inc. ("Mesirow Financial"). All rights reserved.

The information in Diane Swonk's Fed Flash is the proprietary and copyrighted material (the "Copyrighted Material") of Mesirow Financial. The Copyrighted Material, or any portion thereof, may not be reproduced, retransmitted or submitted to any media outlet, or posted on any Web site aside from mesirowfinancial.com without the express written consent of Mesirow Financial. This information provided here in is believed to be obtained from sources deemed to be accurate, timely and reliable. However, no assurance is given in that respect. The reader should not rely on this information in making economic or other decisions. The views expressed herein are those of the author and may not necessarily represent the views of Mesirow Financial, its operating businesses or other of its employees. This communication does not constitute an offer or solicitation, or solicitation of any offer to buy or sell any security, investment or other product. Likewise, this communication serves to provide certain opinions on current market conditions, economic policy or trends and is not a recommendation to engage in, or refrain from engaging, in a particular course of action.