Initial unemployment claims fell to a half-century low last week.
The Labor Department reported Wednesday that initial unemployment claims last week fell to their lowest level since 1969.
New filings for state benefits totaled 199,000 on a seasonally adjusted basis, a drop of 71,000 from the previous week.
This decline is a milestone in the economy’s recovery from the pandemic. Weekly claims exceeded six million in April 2020 as the coronavirus forced businesses and consumers alike to close. As recently as early January, new state claims exceeded 900,000 in a week, amid the winter resurgence of the coronavirus.
Filing for unemployment benefits has declined sharply since then, but remained well above pre-pandemic levels until very recently.
Unemployment insurance was a major source of relief as the pandemic put more than 20 million people out of work. To consolidate state payments, emergency benefits were funded through federal pandemic relief bills, although those payments were stopped in September, stopping aid to 7.5 million people.
Despite the lull of summer, the economy has been showing signs of life lately. Employers added 531,000 jobs in October, and most economists expect growth to pick up in the last quarter of the year, fueled by healthy consumer spending.
“Today’s data reinforces the historic economic progress we are making and the importance of building on that progress in the coming weeks,” President Biden said in a statement regarding the unemployment claims report.
As a measure of progress, Mr Biden pointed to the most recent tally of unemployment benefits of all types since early November, which showed the number of people with continued claims – those filing for benefits who have already Has filed initial claim – 2.4 million on. Just before Thanksgiving last year, that figure was more than 20 million.
The biggest economic concern lately has not been unemployment but inflation, which is rising amid labor shortages, supply chain disruptions and high energy prices.
In a separate report on Wednesday, the Commerce Department said household spending rose 1.3 percent in October, while personal income grew 0.5 percent before adjusting for inflation. It also showed that prices increased by 5 per cent in the 12 months from October.
Unemployment claims data, although certainly welcome news, may not be as good as it sounds. The state’s claims increased on unjust grounds last week. And employment is 4.2 million below its level in February 2020 before the pandemic.
“While the labor market is improving, we think the latest drop in claims may be exaggerated,” said Gregory Dako, chief US economist at Oxford Economics. “We suspect the decline last week may have been exaggerated by bizarre seasonal adjustment factors and we think we may see a bounce in the coming weeks.”
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