Tags: joel naroff | jobless claims | federal reserve | economy

FBA's Joel Naroff: Jobless Claims Spike 'Not Really Good' News for Fed

Thursday, 19 December 2013 09:59 AM EST

Home resales hit a near one-year low in November and new filings for unemployment benefits unexpectedly rose last week, putting a wrinkle in an otherwise brightening economic picture.

The National Association of Realtors said on Thursday sales of previously owned homes fell 4.3 percent last month to an annual rate of 4.90 million units. That was the lowest since December last year and was the third monthly fall in a row.

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 379,000, the highest level since March.

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The reports were released a day after the Federal Reserve gave the economy a vote of confidence by announcing that it would reduce its monthly $85 billion bond buying program by $10 billion starting in January.

The U.S. central bank described the risks to the outlook for the economy and the labor market as "having become more nearly balanced."

"This is not really good. Some of us had thought last week's jump was an aberration. We have to see what's going on here. Obviously the Fed won't be looking at these numbers kindly after what happened yesterday," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa., and a member of the Newsmax Financial Braintrust Alliance.

Economists polled by Reuters had expected home resales to fall to a 5.03 million-unit pace in November and first-time benefit applications to drop to 334,000 last week.

Stocks on Wall Street were trading lower after rallying the prior session. U.S. Treasury debt prices fell, while the dollar rose against a basket of currencies.


Home sales have been hurt by a rise in interest rates since the spring and ongoing price increases that have shut some home buyers out of the market.

But the overall housing market recovery remains intact as a steady rise in household formation from multi-decade lows props up demand and encourages builders to undertake new projects.

The median existing home price rose 9.4 percent in November to $196,300 from the same month in 2012.

"We see no reason for concern about the sustainability of the housing market recovery as the weakness is likely due entirely to the lingering drag on activity from the sharp back-up in mortgage rates earlier this year," said Millan Mulraine, senior economist at TD Securities in New York.

Jobless claims data continue to be plagued by seasonal volatility. It is difficult to adjust the data for seasonal fluctuations around the Thanksgiving and Christmas holidays.

Other labor market indicators have pointed to a strengthening in job growth.

Last week's claims data covered the period for the December nonfarm payrolls survey. Claims increased 53,000 between the November and December survey periods, but seasonal volatility reduces their usefulness in trying to predict payroll growth.

Payrolls increased solidly in October and November. The unemployment rate dropped to a five-year low of 7.0 percent in November.

A third report showed a slight pick-up in factory activity in the mid-Atlantic region December, driven by strong order growth and an improvement in the area's labor market conditions.

The Philadelphia Federal Reserve Bank said its business activity index rose to 7.0 from 6.5 in November.

Any reading above zero indicates manufacturing expansion in the region, which includes factories in eastern Pennsylvania, southern New Jersey and Delaware.

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© 2024 Thomson/Reuters. All rights reserved.

The number of Americans filing new claims for unemployment benefits rose last week to the highest level in nearly nine months, casting a shadow on the labor market.
joel naroff,jobless claims,federal reserve,economy
Thursday, 19 December 2013 09:59 AM
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