Unemployment Claims Fall, But Recovery Faces More Speed Bumps

Of all the economic news last week, the fall in unemployment claims had the most positive impact. It's great to see them come down, and my work suggests that May is on track for a 275,000 gain in payrolls, which is well above current consensus. Claims fell by 29,000 to 409,000 last week, the second improvement in a row after a couple of sad-sack weeks that were muddied by special events like a new emergency benefits program in Oregon and the layoffs resulting from the parts shortage in Japan. All told, over the past two weeks claims have fallen by 69,000 -- which nearly erases the 74,000 spike in claims in the prior two weeks. In short, we're back to where we were a month ago. Still, we have two big problems looming like Godzilla on stilts. To learn about two of the biggest threats to the recovery, read on...