The good news about the U.S. job market is that the number of people filing for initial jobless claims fell last week by 24,000, to a 3-month low of 398,000, the Labor Department announced Thursday.

Claims for the previous week ending July 16 were revised slightly higher, to 422,000, up from the originally estimated 418,000. The four-week moving average fell, by 8,500 to 413,500 from the previous week's revised average of 422,500.

The bad news is the nation is the midst of its greatest "job deficit" since the Great Depression. The Economic Policy Institute, a liberal Washington think tank, said the U.S. economy needs to add 7 million jobs, just to return the workforce to prerecession levels.

What's more, to keep up with population growth, the economy would have to add 11.1 million new jobs to restore the nation to the pre-recession unemployment level of 5.0 percent in December 2007.

To put that in perspective, if the U.S. economy added 300,000 new jobs per month, it would take roughly 37 months to return the nation to that 5.0 percent unemployment rate. During this recovery, the economy has created less than 200,000 new jobs per month.

The Labor Department also said 3.70 million Americans were receiving continuing claims from unemployment, and 3.17 million were receiving emergency claims.

Job Market/Economic Analysis: There's no way to deny it: the U.S. has an enormous "jobs deficit."

Further, the grim reality is that, unless the private sector starts hiring en masse immediately, the U.S. unemployment rate will probably rise in the second half of 2011, because budget deficit reduction efforts in Washington will decrease spending, leading to a reduction in demand and triggering actual government job lay-offs at the federal, state, and local levels.

What's needed now? Policy makers, both public and private, must find ways to create jobs -- the nation's high unemployment rate is the biggest threat to the economic expansion's durability, and ultimately, to corporate revenue and earnings growth.