Initial jobless claims are essentially unchanged with a 1,000 decrease to 202,000 in the January 6 week after a scant revision higher to 203,000 in the prior week. The level is slightly below the consensus of 209,000 in the Econoday survey of forecasters. The four-week moving average puts the level of claims also about unchanged in the January 6 week with a dip of 250 to 207,750. It is typical for unadjusted claims levels to spike in the first weeks of January as seasonal workers are laid off. In the January 6 week, unadjusted claims are up 47,632 to 317,048.

Insured jobless claims are down 34,000 in the December 30 week to 1.834 million. The four-week moving average is down 8,000 to 1.862 million for the week. Unadjusted insured claims jumped 202,792 in the December 30 week to 2.105 million. It is usual for the number of beneficiaries of unemployment benefits to rise in December as many businesses adjust payrolls before the new year or scale back activity during the winter months.

The insured rate of unemployment is down a tenth to 1.2 percent in the December 30 week. The rate has been hovering between 1.2 and 1.3 percent since the end of September. Unemployment among those eligible for benefits remains low and consistent with modest economic expansion and tight labor supply.

Jobless claims for the January 6 week are expected to come in at 209,000 versus 202,000 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.