Have jobless claims broken lower? At 220,000 in the September 9 week, initial claims were up only 3,000 from 217,000 in the September 2 week that was down from 229,000 in the prior week. The 4-week average of 224,500 is down a sizable 5,000 and is at its lowest level since early in the year.

Continuing claims have been steady, up 4,000 in trailing data for the September 2 week to 1.688 million keeping the unemployment rate for insured workers unchanged for a second week at a very low and impressive 1.1 percent.

This report together with stronger-than-expected retail sales data also released this morning at 8:30 ET leave Econoday's Relative Performance Index (formerly known as the Consensus Divergence Index) at plus 33 to indicate US data are appreciably exceeding expectations, something the Federal Reserve will consider when it meets next week.

Jobless claims for the September 14 week are expected to come in at 225,000 to reverse much of a sharp and unexpected 13,000 fall to 216,000 in the prior week.

New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smooths out weekly volatility.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with an income that gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so a stronger job market generates a healthier economy.

There's a downside to it, though. Unemployment claims, and therefore the number of job seekers, can fall to such a low level that businesses have a tough time finding new workers. They might have to pay overtime wages to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This leads to wage inflation, which is bad news for the stock and bond markets. Federal Reserve officials are always on the look-out for inflationary pressures.

By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation looks threatening, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked jobless claims and adjusted their portfolios to anticipate these events.

Just remember, the lower the number of unemployment claims, the stronger the job market, and vice versa.