Surprise in Q2 GDP and Jobless Claims

The Department of Labor also reported that new claims for unemployment benefits dropped by 6,000 last week to a seasonally adjusted total of 331,000 from a revised level of 337,000 for the prior week. The consensus estimate from Bloomberg called for a drop to 332,000. The four-week moving average is up slightly from the prior week to 331,250.

The army of the unemployed dropped by 14,000 to 2.99 million continuing claims.

GDP growth in the second quarter was primarily the result of increases in consumer spending, exports, private inventory investment, nonresidential fixed investment and residential fixed investment. Federal spending cuts and higher imports weighed on GDP growth.

The trends in employment continue to show declines in new claims for benefits and employers’ intention to increase hiring. The impact of higher taxes that went into effect at the beginning of the year and the cuts in federal jobs are being absorbed and adapted to by employers. There are more headwinds, of course, including the political drama around raising the U.S. debt limit, new health care laws and the Fed’s expected tapering of its $85 billion asset purchases.