Plenty of news on the economic front today, most of it poor, but one significant bright spot did shine this morning — at least for a moment or two.  The Department of Labor reported that initial jobless claims dropped last week by 26,000 to a four-year-low 350,000:

In the week ending July 7, the advance figure for seasonally adjusted initial claims was 350,000, a decrease of 26,000 from the previous week’s revised figure of 376,000. The 4-week moving average was 376,500, a decrease of 9,750 from the previous week’s revised average of 386,250.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending June 30, unchanged from the prior week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending June 30 was 3,304,000, a decrease of 14,000 from the preceding week’s revised level of 3,318,000. The 4-week moving average was 3,308,500, an increase of 1,250 from the preceding week’s revised average of 3,307,250.

That sounds like great news, and it would be — if last week didn’t have a holiday right in the middle of it.  Independence Day, a national holidy, was on Wednesday, and government offices were closed up tight.  Most businesses were closed for at least one day, if not more, so hiring and termination activity would have slowed as well.  Each year, we see an artificially low figure around the Fourth of July, and this looks like another round.

Zero Hedge and Steve Eggleston question the amount of seasonal adjustment going on as well:

I’m not as concerned with seasonal adjustments, although it should be noted that unadjusted claims did go up, as ZeroHedge points out, by 69,971.  I am assuming that there was probably a significant amount of estimation going on in state reporting over the holiday, and that we’ll see a big boost upward next week in the adjustment.  (Last week’s number of 374K got adjusted upward to 376K, the latest in an improbably long series of upward rather than downward revisions.)

Reuters cheered the results, but added a caveat … in the eighth paragraph:

The drop, which brought new claims to their lowest level since March 2008, was much steeper than Wall Street economists expected. The prior week’s figure was revised slightly higher to 376,000 from the previously reported 374,000.

Hiring by U.S. companies slowed dramatically in the second quarter as employers grew worried about Europe’s snowballing debt crisis, which is weighing on the global economy. Many employers also are concerned over the possibility the U.S. government may cut spending and let tax cuts expire next year, which could send the economy into recession.

The level of new claims for unemployment insurance was the lowest since March 2008 — the early days of the 2007-2009 recession. …

Still, the jobless claims data had an important caveat. A Labor Department official noted that part of the drop might be due to some auto manufacturers keeping their plants open during the first week of July to meet demand.

Normally plant closures during that week would lead to a spike in jobless claims, but they did not materialize. That suggests part of the strength in the labor market last week might be due to temporary factors.

On the other hand, import prices fell sharply:

U.S. import prices fell last month by the most in more than three years mostly due to a plunge in the cost of imported oil, further icing inflation pressures.

Overall import prices dropped 2.7 percent, the Labor Department said on Thursday. It was the third straight month of declining prices for goods and services bought abroad.

Import prices have only risen once in the last seven months. June’s decline was the steepest since December 2008.

Export prices also fell by 1.7%, the second straight month of decline.  That comes from a lack of demand, and not just in gasoline.  That’s why the numbers on the weekly jobless claims look like an outlier than a trend, especially around the holiday.  With prices falling and retail sales in retreat, there doesn’t seem to be any reason to expect a sudden boom in job creation.

Even Warren Buffett is sounding more bearish today:

Warren Buffett has changed his view on the U.S. economy.

In a live CNBC interview from Sun Valley with Becky Quick of “Squawk Box,” Buffett says the general economy’s growth has slowed so that it is now essentially “flat.” …

Buffett also says things are beginning to “slip pretty fast” in Europe, especially over the past six weeks.  He’s confident “they’ll get it worked out” by ten years from now, but right now there’s no obvious answer.

At least the Fed doesn’t seem interested in launching another round of quantitative easing, but that option isn’t off the table yet, either.  The decline in import and export prices means that inflation is no longer a worry, but deflation might be, and a QE3 would keep that from happening.  Don’t be surprised to see more hints and pressure on the Fed to act in the next couple of months if the economy keeps trending downward.