Is the Unemployment Glass Half Empty or Half Full?

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The good news about your job prospects these days is that they definitely seem to be getting worse at a slower rate.

The Labor Department reported Thursday that new claims for state unemployment benefits fell last week to 402,000, down a smidge from a revised 405,000 the prior week. Outplacement firm Challenger, Gray & Christmas, while scaring the pants off everybody Wednesday with the news that job cuts had hit 1 million for the year, also noted that companies announced 32 percent fewer cuts last month than during July.

So is the stream of blood and pink slips — and the threat it poses to consumer confidence and spending — finally drying up? The overall totals are still scary — 1.12 million layoff announcements is still 83 percent more than at this time last year, and 3.3 million people filing for continued unemployment claims is the most since this time in 1992, when there was a recession on. And theyíre still rising — the four-week rolling claims average edged up to 398,000 this week from 394,500, and the unemployment number for August, due out Friday, is expected to tick up again, to 4.6 percent from the 4.5 percent itís been all summer.

But theyíre rising slower than they have in a while, mainly because this is still a competitive marketplace, and there are still jobs out there. A report this week by research firm Towers Perrin even found that 73 percent of companies who were laying off workers were also hiring workers, and talented workers, at least, are having little more trouble job-hopping than they did last year.

Not that itís all roses out there. Clearly the job "churning" thatís keeping unemployment contained is leaving some people making less than they did before — discount chains like Wal-Mart and JC Penneyís arenít seeing their same-store sales go up because people are getting raises. If the unemployment picture isnít yet bleak enough to push consumers over the psychological brink into complete shopping withdrawal, itís still bad enough to keep them watching their wallets.

The question is, where does it go from here? Layoffs and unemployment typically rise coming out of a slowdown, as companies use job cuts to regain profitability and prepare for future growth. Optimists will tell you that the worse the numbers get, the more likely a quick recovery becomes.

Pessimists, of course, will look at that theory and wonder where that nascent recovery has been hiding. If unemployment rises sharpest after the slowdown is done, say the bears, then it follows that this round of upticks is only a prelude to a very ugly second wave of layoffs, when companies find out this winter that consumer demand just ainít what it was in all spring.

After all, jobs are where people get their spending money, and job security is where they get their confidence. And a job picture thatís still bottoming out after eight months — just getting darker more slowly — doesnít exactly qualify as the light at the end of the tunnel.