Bernanke Calls Unemployment Situation a ‘National Crisis’ as Jobless Claims Drop

Federal Reserve Chairman Ben Bernanke called the nation’s unemployment situation a “national crisis” during the Q&A after a speech Wednesday night in Cleveland.

“We’ve had close to 10 percent unemployment now for a number of years and, of the people who are unemployed, about 45 percent have been unemployed for six months or more. This is unheard of,” he said.

But economists are breathing a brief sigh of relief this morning after the Labor Department announced jobless claims were 391,000 for the week ending Sept. 24. The Commerce Department also revised its second-quarter GDP figure slightly upward.

It was the first time since the beginning of August that claims were less than 400,000, a threshold that economists say indicates an especially unhealthy labor sector.

Today’s announced figure is a decrease of 37,000 from the previous week’s revised figure of 428,000.

Guy LeBas, chief fixed income strategist with Janney Capital Markets, said today’s claims figure was “significant.”

“It’s one marker of fewer layoffs but the problem is it’s not the matter of layoffs but the level of hiring,” he said.

LeBas said there are no layoffs but still no hiring.

“That relationship has gone sideways,” he said.  ”Individuals with jobs are in a more stable position but individuals without employment are still having trouble finding jobs. It’s not a common situation.”

The Commerce Department this morning revised its second quarter estimate of GDP for the third time, saying it increased at an annual rate of 1.3 percent, instead of the previously thought 1 percent announced last month.

In the first quarter, real GDP increased 0.4 percent.

LeBas said the GDP figure was “moderately positive news,” but backward looking and therefore not significant to the markets this morning.

LeBas said the higher than previously stated GDP figure might refute those who believe the country is already in a recession, depending on how you define a recession.

“If you define a recession as high joblessness and ability to get jobs, then we are already in a recession. If you define recession as two quarters of negative growth, then no, we’re not in one,” he said. “I would argue that the distinction is useful for economists, but not useful for the average person.”