US weekly jobless claims fell to their lowest level of the pandemic last week. Stronger hiring and consumer spending spurred US recovery efforts which led to increased hiring. Worker filings for unemployment benefits fell to 684,000 last week from 781,000 a week earlier. This means the number of weekly jobless claims are now at their lowest since March of last year. The numbers also represent the lowest in a year. The four-week average for jobless claims, which smoothens the volatility in weekly figures, also fell to a pandemic low of 736,000.
The US Starting Its Recovery Process
Julia Pollak, the labor economist at ZipRecruiter, says that recovery is underway. “The recovery is really hitting full steam again, and all of the conditions will be in place for a real, explosive liftoff in the summer when hopefully we’ve reached a higher vaccination threshold,” she said.
However, the recovery is yet in the early stages. Millions of Americans are still suffering from long-term joblessness. The number of continuing claims, which represents jobless Americans who have yet to get a new job, rose to 19 million. Last week, it was 18.2 million. In addition, a number of households recently came into relief money from the government.
Weekly Jobless Claims Fall
Current economic activity is helping create a hiring mood. Government stimulus increased vaccinations, and easing store rules are encouraging more businesses to open again. In turn, Americans begin ramping their spending, including in-person services. In effect, employers added 379,000 jobs by February. Meanwhile, the unemployment rate fell to 6.2%.
Economists expected the revival later to happen, even before the $1.9 trillion stimulus package went into effect. In addition, the availability of vaccines helped as well, as it eased confidence to reopen businesses. Meanwhile, household savings totaled $3.9 trillion in January, up from $1.4 trillion in February 2020. With the third round of stimulus checks ending up in Americans’ bank accounts, they now have more cash to spend. It’s a matter of finding where to spend.
From a 4.87% projection in February, economists now adjusted their economic growth forecast to 5.95%. If the US hits that number, it will become the fastest recovery pace in nearly four decades. Actually, growth already started as early as last year. By year’s end, the GDP grew by 4.3%, which is higher than the 4.1% target set by the government.
Growth started to pick up last summer. In the final months of 2020, gross domestic product advanced at an annual rate of 4.3%, up from an earlier estimate of 4.1%, the Commerce Department said Thursday. A boost to inventories, and a slight improvement for the state- and local-government spending accounted for most of the upward revision.
Fed to Keep Spurring Growth
Even as the jobs picture continually improves, the Federal Reserve said they will continue to prop growth higher. Fed Chairman Jerome Powell said on Thursday that it will continue pushing its aggressive policies to maintain steady growth. “We will very, very gradually over time, and with great transparency when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times,” Powell added.
Powerful fiscal help from Congress combined with accelerated vaccine distribution has allowed the U.S. economy to recover faster than expected, Federal Reserve Chairman Jerome Powell said Thursday.
In addition, Powell said the Fed will eventually scale down on their efforts, but it’s not in the cards in the near future. “As we make substantial further progress toward our goals, we’ll gradually roll back the number of Treasuries and mortgage-backed securities we’ve bought. We will very gradually over time and with great transparency when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times,” Powell added.
Watch the Reuters video reporting that US jobless claims fell to their lowest level since the pandemic:
Are you feeling the increased economic recovery from where you are right now? Do you think this is the start of the great American economic renewal? Let us know what you think about the decreasing jobless rates and increased store activity. Share your reactions in the comment section below.