US weekly job claims fell to their lowest rate in more than 50 years. For the week ending November 20, unemployment claims totaled 199,000. The figures represent the lowest levels recorded since November 1969.
Lowest US Weekly Jobless Claims Since 1969
The Labor Department reported Wednesday that the US weekly jobless claims fell by 71,000 compared to the week before it. This meant that the US economy while experiencing hiccups, is continuing its mighty run to get back on track.
The news gave a welcome sigh of relief for the beleaguered US labor market. At present, the US is tallying 4 million jobs lower compared to 2019 levels. However, the workforce remains strong. The economy is adding around 581,000 jobs a month on average.
Consumer Spending Also On The Rise
In addition to lower US weekly jobless claims, the Commerce Department also shared the good news. Consumer spending increased by 1.3% last October.
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This is its fastest growth rate since March. More importantly, this means Americans are continuing to spend money.
As a result of the positive news, economists are now scrambling to revise their outlook for the fourth quarter. Especially after a difficult and disappointing third quarter, many banks dialed down their predictions the last few months.
Now, they’re revving it back up. For example, JPMorgan Chase revised its estimate from 5% to an annualized 7 percent. Meanwhile, adjusted its forecast from 3% to 8.7%.
American Economy Stronger Than Expected
Joe Brusuelas, the chief economist at RSM, expressed a pleasant surprise at the US economy’s resiliency. RSM moved their firm’s forecast as well.
From a 5.6% prediction, the company now sees US GDP rise by 7.2%. “The economy is much stronger than what we had originally understood. The US economy is booming right now. Despite the increase in inflation,” Brusuelas said.
The US weekly jobless claims came as the biggest surprise. The claims, which also stands for the number of people who lost their jobs, fell by 71,000 compared to the previous week.
The week ending November 20 was the eighth straight week of decline for US weekly jobless claims. It also marked a return to pre-pandemic levels. In 2019, the average US weekly jobless claims were around 220,000.
It Could Be Seasonal Hiring
However, some economists advised caution in interpreting the numbers. Lower unemployment claims could point to a rash in seasonal hirings.
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However, the drop rates were substantially lower compared to last year’s numbers of 700,000 claims. The low number also likely means a tighter labor market.
More and more companies are pulling out the stops to retain their employees and expand their workforce.
Meanwhile, Mark Hamrick, senior economic analyst at Bankrate, said the developments were a wonderful surprise. “It is fair to say we didn’t see that coming.
Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement,” he said in an email.
Biden Also Weighs In On Lower Unemployment Claims
On Wednesday, President Joe Biden also shared his optimism. The lower US weekly jobs claims were an example of his administration’s “historic economic progress”.
In a statement, the President said there are more things that needed to be done. “We have more work to do before our economy is back to normal,” he said.
This includes “addressing price increases that hurt Americans’ pocketbooks and undermine gains in wages and disposable income.”
Watch the CNBC Television video reporting US jobless claims decline to the lowest level in over 50 years:
Do you find the lower US weekly jobless claims an indicator that the American economy is taking off? Will the US economy go bananas and break out this fourth quarter?
Let us know what you think. Share your thoughts below.