Jobless Claims Plunge
Those applying for U.S. state unemployment benefits decreased by 35,000 to a seasonally adjusted 291,000 in the last week of 2006. The Labor Department reports this is the lowest figure since September 2000. The Labor Department cautioned that this data at this time of year is volatile because of the holidays and large expected swings in seasonal employment.
The four-week moving average for new claims also hit the lowest figure since August 20th, when Hurricane Katrina devastated the Gulf Coast. This figure fell 9,750 to 316,750.
Stephen Stanley, chief economist at RBS Greewich Capital, told MarketWatch, “I would argue strongly that market participants would be wise to pretty much ignore this figure, though I would realize that will be a difficult things to do 24 hours before payrolls.”
Drew Matus, an economist at Lehman Brothers, made a contrasting statement. He told MarketWatch, “It does support our view that tomorrow’s payroll report will be close to 200,000 and that the unemployment rate will dip to 4.9%.”
Economists say that filings in this range correspond with a steady job growth of about 200,000 per month according to the Labor Department. New jobless claims have stabilized between 320,000 and 335,000 for the last two months after surging to 435,000 after the Gulf hurricanes.
The Labor Department reports those collecting unemployment benefits rose to 2.72 million, increasing 13,000 in the week ending December 24, 2005. The four-week average of continuing claims increaded by 33,000 to 2.66 million.
The advanced figure for the seasonally adjusted insured unemployment rate was 2.1 percent for the weeks of December 17 and 24. The Labor Department reports the advance unadjusted figures for the same weeks were 2.1 and 2.2 relatively.
In the week ending December 17, the highest insured unemployment rates occurred in Alaska (4.8 percent), Puerto Rico (4.3), Mississippi (3.7), Lousiana (3.6), Michigan (3.3), Pennsylvania (3.2), Wisconsin (2.9), New Jersey (2.8), Oregon (2.8), and Rhode Island (2.7).
In similar news, the Internal Revenue Service (IRS) has eliminated the requirement for employers to send certain Form W-4s to the IRS. The IRS is also increasing its withholding compliance program by making better use ensuring enough federal income tax is withheld from employee paychecks.
These Form W-4s claim more than 10 allowances or claim complete exemption from withholding if $200 or more in regular weekly wages is expected. The IRS is using data already reported on Form W-2s to effectively identify workers with withholding problems. Those workers with serious under-withholding problems are notified to withhold more income tax and the IRS may direct their employers to submit copies of the employee’s Forms W-4 to ensure compliance. This will also address situations where employees fail to file federal returns.
The IRS provides an online withholding calculator. You can also review Publication 919, How Do I Adjust My Tax Withholding? You will require Adobe Reader or Acrobat to see this page. Review any temporary and proposed regulations at http://www.irs.gov/taxpros/article/0,,id=137393,00.html.
IRS Commissioner Mark Everson said in a prepared statement, “We can eliminate this reporting requirement without hurting our enforcement efforts. Whenever we can, we try to reduce burden.”