7% Unemployment? The Fed Says YES! (But not until 2013)

The weekly jobs data shows a larger than expected increase in new filings for unemployment.  CNBC reports;

Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 410,000, the Labor Department said, partially reversing the prior weeks hefty decline.

Economists polled by Reuters had forecast claims rising to 400,000. The previous weeks figure was revised slightly up to 385,000, from the previously reported 383,000.

This data, plus Fed Chairman Bernake's Feb. 3rd statements about the long-term employment outlook are diminishing any hopes for solidifying the recovery and getting unemployment below 7% until sometime in 2013.

"Following the loss of about 8-1/2 million jobs in 2008 and 2009, private-sector employment showed gains in 2010. However, these gains were barely sufficient to accommodate the inflow of recent graduates and other new entrants to the labor force and, therefore, not enough to significantly reduce the overall unemployment rate. Recent data do provide some grounds for optimism on the employment front; for example, initial claims for unemployment insurance have generally been trending down, and indicators of job openings and firms' hiring plans have improved. Even so, with output growth likely to be moderate for awhile and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established."

There are reports of positive economic indicators in parts of the economy;

Fed officials said in an updated forecast released Wednesday that they think the economy will grow between 3.4 percent and 3.9 percent this year. That's an upward revision from their November forecast, which predicted gross domestic product will grow 3 percent to 3.6 percent.