WASHINGTON (AP) – The number of Americans seeking unemployment benefits fell to 547,000 last week. This marks a new low since the pandemic started and another encouraging sign that layoffs are slowing due to an improving labor market.
The Labor Department said Thursday that applications had dropped by 39,000 from 586,000 the week before. Weekly unemployment claims have fallen sharply from a high of 900,000 in early January. At the same time, they are still well above the level of around 250,000 that prevailed before the virus outbreak hit the economy in March last year.
In the week ending April 3, the last period for which data is available, around 17.4 million people continued to receive unemployment benefits, up from 16.9 million the previous week.
The entire labor market is growing steadily. Last month, the country’s employers created 916,000 jobs, most since August, a sign that a sustained recovery is on the horizon. The unemployment rate fell from 6.2% to 6% and was thus well below the pandemic peak of almost 15%.
The still high number of current recipients shows, however, that despite the economic upturn in recent weeks, millions of people – disproportionately low-income workers and people of color – continue to suffer a loss of jobs or income and have difficulties paying bills or rent.
The weekly data on unemployment benefits claims are generally considered to be a rough measure of layoffs, as only those who have lost their jobs through no fault of their own are eligible. But during the pandemic, the numbers have become a less reliable barometer.
Many states have worked to clear backlogs of jobless claims and suspected fraud has tarnished the actual volume of downsizing. Additionally, an additional $ 300 weekly unemployment benefit on top of regular state unemployment benefits may have encouraged more people to claim benefits.
The economy is now showing steady signs of recovery. Retail and restaurant sales rose 10% in March – the largest increase since last May. Most adults were sent $ 1,400 federal stimulus checks. And Americans who have kept their jobs have amassed additional savings, some of which they will likely spend after states and cities relax business restrictions and the virus wears off.
Economic growth is accelerating so rapidly that the major problems related to the economy have shifted from high unemployment and anemic spending to bottlenecks in corporate supply chains and the difficulty of some companies in finding sufficient labor.
These issues, in turn, have raised concerns that the Federal Reserve’s policy of low interest rates could lead to inflation spiking. Last month, wholesale prices rose 4.2% year over year. This was the largest increase in twelve months in nearly a decade.
Nevertheless, consumer prices have so far been rising more cautiously. They were up 2.6% yoy in March, mainly due to an increase in gas prices. Excluding the volatile food and energy categories, core inflation only rose 1.6% over the past 12 months.
Economists predict inflation will rise steadily over the coming months, as prices fell about a year ago when the pandemic first hit and the economy largely stalled. Therefore, comparisons with the price level a year ago are particularly extensive.
Fed chairman Jerome Powell believes that higher inflation will prove to be temporary and that supply shortages will eventually improve as shipping picks up and factories produce more parts.