Every Thursday, the federal government releases data on new jobless claims, and for the last several months, they’ve hovered between 350,000 and 400,000. For the sake of context, a number below the latter is evidence of an improving jobs landscape, and a number below the former is a sign that jobs are growing at a fast pace. Today, the Department of Labor announced there were only 335,000 new jobless claims for the previous week:
New applications for U.S. unemployment benefits fell by 37,000 to a seasonally adjusted 335,000 in the week ended Jan. 12, the Labor Department said Thursday. Claims fell to the lowest level since January 2008, but the big drop likely stems from a seasonal-adjustment quirk whose effects could quickly fade and push the numbers back up in the next few weeks. Economists surveyed by MarketWatch expected claims to drop to 368,000 from last week’s slightly revised 372,000.
When combined with increased housing activity, and firmer consumer spending, this is a sure sign that the economy is on the path to recovery. The problem, of course, is that we’re not moving fast enough. Demand is too low, private sector spending is too low, and—as a result—unemployment is high. Which, as I’ve noted (constantly) for the last few months, means that the government ought to do more—not less—to improve the economic picture. Deficit reduction, even if it’s only modest, is not the right approach for the moment.
On that note, Slate’s Matthew Yglesias makes a good point about why the federal government ought to be borrowing money right now. In short, the only way a large government can save is by investing in concrete goods, and to do that, we need to spend:
[I]f you borrow $10 million to do road repairs, that shows up as an increase in indebtedness. The right way to think about it, however, would be that the road is a depreciating asset that has a value. Every year it goes unrepaired, its value declines. So borrowing $10 million to fix the road might improve the government’s net financial position, depending on the nature of the project. Right now we’re at a time when it’s never been cheaper to finance federal borrowing. Consequently, borrowing money and spending it on sound projects of long-duration is the best way we have to “save” for the future even though it technically adds debt.
If Washington were being responsible, it would shelve debt reduction, borrow $500 billion, and get to work on improving public services, building new infrastructure, and repairing existing stock.