Fox News contradicted a wealth of economic evidence to claim that a near five-year low in weekly jobless claims indicates that the economy has entered a "new normal."
Following the release of the Bureau of Labor Statistics' report on initial weekly jobless claims, which showed the number falling by 12,000 to 334,000, Fox Business host Stuart Varney claimed that while there was a significant drop in those filing for unemployment benefits, the number was still "relatively high." From Fox News' America's Newsroom:
After co-host Martha MacCallum correctly noted that the number of weekly jobless claims neared a five-year low, Varney insisted that the number was too high and that it indicated the economy is entering a "new normal" of sluggish economic growth.
But Varney's assertions about weekly claims don't match the data. Since 1967 -- the earliest data available -- initial jobless claims have averaged about 363 thousand per week. This week's number is about 30 thousand lower than the historical average - hardly a "relatively high" figure.
The suggestion that this week's numbers show signs of a "new normal" also doesn't stand up to scrutiny. Since peaking in 2009, weekly jobless claims have maintained a consistent downward trend, and the current numbers mirror those experienced in previous decades.
According to a Reuters report, the drop in jobless claims experienced in recent weeks signals a slowdown in layoffs:
Many economists believe growing confidence in America's economic recovery has led U.S. employers to exit a long cycle of elevated layoffs.
The continued insistence that the economy is entering a "new normal" is particularly strange given that in recent weeks, there have been signs that the economy is slowly improving, ranging from a surge in housing prices to a five-year high in consumer confidence.
While economic gains have not been rapid in recent years, Varney and MacCallum failed to note that many economists have pointed to deep and unnecessary spending cuts as holding back growth. Indeed, reductions in government spending have reduced potential GDP growth, and public sector job cuts are holding back labor market gains, a deviation from previous recoveries.