The previous week's number was revised upward by 6,000 so the drop in first time claims for unemployment is pretty insignificant.

Reuters:

The number of Americans filing new claims for unemployment benefits fell last week, government data showed on Thursday, but remained too high to signal any major improvement in the labor market.

Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 386,000, the Labor Department said. The prior week's figure was revised up to 392,000 from the previously reported 387,000.

Economists polled by Reuters had forecast claims easing to 385,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, slipped 750 to 386,750.

The labor market has lost a step in recent months as uncertainty spawned by the debt crisis in Europe and an unclear fiscal policy path at home has made businesses reluctant to hire. However, there are no signs in the claims data that companies are responding to that uncertainty by laying off workers.

Jobless claims have barely moved since April and the lack of improvement suggests a fundamental weakness in the labor market.

There's more to businesses not hiring than "uncertainty" or what's happening in Europe. There is an existential crisis in the economy. Labor and management both are fearful of the future. We have a president who is uninspiring, who doesn't believe in the free market, and who has promulgated policies and regulations that make it harder for companies to hire.

But beyond Obama's incompetence, there is a sense of a rudderless ship and our mandarins in Washington who don't know how to reignite the economy. Romney, an enthusiastic supporter of markets, might be the guy who can alter the psychology and spur the economy to action.

Or, it is even beyond Romney's abilities and we will be stuck in this rut for the forseeable future. I am fearful that the latter is more probable given the damage the recession and Obama's policies have inflicted on the economy.