Jobless claims hit highest level in six weeks

Economists say the market is in better shape when applications fall below 375,000.

Employers added 165,000 jobs in April, which was above expectations. But economists estimate that job creation could drop off over the next several months as $80 billion in sequestration finally kicks in and cuts into overall economic growth. 

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Early estimates from economists are that job growth could drop to around 125,000 a month during the summer.

That trend could last into the fall before the pace of job growth picks up again, unless Republican lawmakers decide they are dead-set on another debt ceiling fight. Another battle over raising the nation's debt limit may come at a time when the economy could be set up to start firing on all cylinders again. 

For now, lawmakers have bigger issues on their plate, including investigations into the targeting of political groups by the Internal Revenue Service (IRS) and the capturing of Associated Press phone records by the Justice Department.

Besides that, immigration reform remains a top priority. 

And, while there is plenty of talk about it, lawmakers are not moving toward a sweeping replacement of the sequester.

Through all of the uncertainty, consumers have, so far, proven resilient, keeping up their spending, which represents 70 percent of economic activity. 

During the first three months of the year, spending hit the quickest pace in more than two years. 

A separate report on Thursday showed that consumer prices fell 0.4 percent in April, boosted by a 8.1 percent drop in gas prices, which is helping consumers keep more of their take-home pay.