The job market continues to show signs of improvement as applications for unemployment benefits fell sharply for the fourth consecutive week. The U.S. Department of Labor has reported that applications fell by 29,000 for the week ending December 7 tumbling to 343,000, the lowest number in two months and the second lowest total this year. The decline in applications suggests companies are making fewer layoffs but must also speed hiring in order to effect real change on the unemployment rate.
The unemployment rate fell to 7.7 percent in November, a four year low, but the drop was due mostly to unemployed people dropping out of the employment market by effectively giving up on searching for work. However, hiring is expected to pick up over the next few months as employers posted more jobs in October than in the previous four month period. Concerns over the ‘fiscal cliff” crisis may delay hiring at many companies due to fears that the event could push the economy back into a recession in early 2013.
As President Obama and Congress attempt to negotiate a deficit-reduction deal that would avoid the financial plunge in January, most economists expect that should taxes increase and spending cuts occur only temporarily, especially if a budget agreement is near, the negative economic effects will be mild.