Jobless claims fall to their lowest level since pandemic began
The number of Americans applying for jobless aid fell to its lowest level since the coronavirus pandemic erupted a year ago. Some 684,000 people applied for unemployment benefits in the week ending March 20, the Labor Department said Thursday. The number, adjusted for seasonal variation, is a drop of 97,000 from the week before.
Another 241,000 people applied for Pandemic Unemployment Assistance, a federal program for the self-employed and gig workers.
"Today's unemployment report shows a slowly-improving labor market, as for the first time in over a year, the Department of Labor has reported fewer than 1 million new claims for benefits," Andrew Stettner, senior fellow at the Century Foundation, said in a statement.
Prior to the pandemic, a typical week saw around 250,000 new unemployment claims, and the number never topped 700,000, even during the depths of the Great Recession. Economists predict that fewer people will file for benefits in the coming weeks as more people receive vaccines and businesses reopen.
"[W]e expect claims to fall sharply as the economy reopens fully across the second quarter," Ian Shepherdson of Pantheon Macroeconomics told investors in a note.
Spending data show the economy is poised to rebound strongly. Credit card data from JPMorgan Chase showed that consumer spending jumped last week as the $1,400 stimulus checks began to be paid out. The Treasury says it has so far distributed 127 million payments worth $325 billion.
Federal Reserve economists expect the economy to grow at a 6.5% pace this year. That would be the fastest rate of expansion since 1984.
Fraud, multiple layoffs cloud the picture
Historically, the weekly unemployment claims figure has been considered a reflection of the pace of layoffs. But that connection has weakened during the pandemic, as fraud, computer problems and a backlog of claims have distorted many states' jobless aid data. That has been particularly true for the federal program that covers self-employed and gig workers; this data has fluctuated wildly in many states.
And a report from the California Policy Lab last week illustrated another complicating factor: Many people have applied multiple times during the pandemic, having been initially laid off or furloughed, then called back to work, then been laid off again. Each layoff has triggered a new application for unemployment benefits.
The Policy Lab's report found that 75% of jobless claims in California in the final week of February were from people who had previously been laid off and applied for benefits.
Nearly 19 million people continue to collect jobless benefits as of early March, the most recent data available. Roughly a third of those are in extended federal aid programs, which means they've been unemployed for at least six months.
Despite strong hiring in February, the U.S. still has 9.5 million fewer jobs today than it did before the pandemic, and about 4 million people have stopped looking for work altogether.
"Things have improved over the last year, but there are still millions of people dealing with real economic pain," AnnElizabeth Konkel, economist at the Indeed Hiring Lab, said in a note. "Once the public health situation is improved, a full recovery can finally take place."
The Associated Press contributed reporting.
