JOBLESS CLAIMS, LOWER HOME SALES, CONTINUE TO SIGNAL ECONOMIC WEAKNESS-ECONOMIC GROWTH PUNDITS CONFUSED

The number of newly laid-off Americans seeking unemployment benefits fell for the third straight week, evidence that layoffs are continuing to ease in the earliest stages of an economic recovery SAY SOME PUNDITS. But are we really seeing real signs of a recovery?

The Labor Department said Thursday that initial claims for unemployment insurance dropped to a seasonally adjusted 530,000 from an upwardly revised 551,000 the previous week.

Fewer layoffs "would be an important sign of improvement ... lessening the critical threat to consumer spending -- and to the overall economy -- represented by falling employment," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients. What a genius he is, with this conclusion.

The Federal Reserve said Wednesday that spending "remains constrained by ongoing job losses," tight credit and falling home values. But consumer spending, which makes up 70 percent of the U.S. economy, could improve as workers feel more secure about their jobs.

This conclusion by the FED is more accurate, it depicts what appears to be the real facts behind the real story behind the numbers. As home values decline, there is less available credit to homeowners, and as credit is tight, there can be no growth!

Meanwhile, home resales dipped unexpectedly last month after four straight gains, a sign the housing market recovery remains fragile. How could they go as as sales are now concentrated in sales of foreclosures, and short sales and bargains?

The National Association of Realtors said sales dropped 2.7 percent to a seasonally adjusted annual rate of 5.1 million in August. Sales had been expected to rise to an annual pace of 5.35 million, according to economists surveyed by Thomson Reuters. The median sales price fell to $177,700, down 12.5 percent from the same month last year.

The four-week average of jobless claims, which smooths out fluctuations, dropped to 553,500. That's the lowest since late January, though still far above the 325,000 weekly claims typical in a healthy economy.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.

The four-week average has fallen by about 100,000 since reaching a peak for the current recession in early April. Economists say initial claims below 400,000 would be a signal that employers are adding to the net.

There are few reasons for employers to add employees or to create new jobs in the face of threats from the government of a variety of punishing actions for new employers, ranging from new taxes to union organizing rules.