The Job Market Isn't Bad, If You Forget About The Housing Crisis

Unemployment claims are dropping — or at least not going up:

The US labour market showed further signs of levelling with a report that new claims for jobless benefits continued to fall last week, and the four-week trend dropped to a six-month low.

First-time claims for unemployment benefits fell by 6,000 to 403,000 in the week ending October 15 from an upwardly revised 409,000 the previous week, the labour department said on Thursday. That brought the four-week moving average of new claims, a less volatile measure of lay-off trends, to a six-week low of 403,000.

“This decline in initial claims signals the potential for an improvement in the pace of job creation in October relative to recent months,” said John Ryding and Conrad DeQuadros of RDQ Economics. “However, we are still waiting for that decisive move in claims below the 400,000 mark to send a stronger signal that payroll growth is running at a pace that will begin to make sustained inroads into unemployment.”

That’s the good news. But what about all that housing debt? As former Fed Vice Chairman Alan Blinder wrote today in the Wall Street Journal, “The seemingly endless housing slump is dragging down our economy. By now, massive underbuilding during the slump far exceeds the overbuilding during the boom.”

Even if relieving people of all their housing debts won’t immediately create jobs, there’s no doubt that the overhang is wreaking havoc on confidence in the economy and the ability of the government to improve people’s lives, and that’s before you include the ripple effects it has on neighborhoods or school systems. No wonder Joe Biden’s son — the Delaware Attorney General — has picked a fight with his dad’s administration over their attempts to reach a settlement that would let banks off the hook for shady mortgage practices.