- New jobless claims sharply down last week
- Claims lowest since onset of pandemic
Labor Market Shaking Off Pandemic Effects
The US Department of Labor reported that new claims for unemployment benefits decreased -100,000 last week from the week before. This drop in new claims confirms the positive effect of the faster vaccine rollout and the passage of the $1.9T relief package, according to experts.
With initial claims for state benefits totaling 657,000 last week, service employees are among the first to feel the benefits of the economy coming back to life.
Rubeela Farooqi, chief US economist with High Frequency Economics,said, “This is definitely a positive signal and a move in the right direction.”
Economists Upgrading Forecasts for US Economic Growth
The Bank of Americais now expecting economic output to increase +7% in 2021 and +5.5% in 2022. Each of these forecasts is .5% above previous predictions. The B of A is also expecting job gains to reach an average of +950,000/month in Q2 2021.
B of A‘s chief US economist Michelle Meyer said, “Stronger economic growth is largely a function of the stimulus, with a meaningful increase in consumer spending. All this should lead to an impressive amount of job creation in the coming months.”
Federal Reserve Bank Not Planning to Raise Interest Rates as Labor Market Wakes Up
As last year, the Fed continues its focus on “shortfalls” from full employment instead of “deviations” or percentage changes in employment statistics.
“The more vibrant the labor market is, the more likely it is to be an inclusive, vibrant labor market,” said Charles Evans, president of the Federal Reserve Bank of Chicago. “We’re not going to prematurely cut off a vibrant labor market…” as it did during the Great Recession a decade ago. That “premature cutoff” has been considered the main reason the economy slogged along at such a lagging pace for so many years
Break in 52-Week Streak of State and Federal Claims Being Stuck at More Than 1M/week
When combining the new state claims of 657,000 for unemployment benefits and the new federal claims of 242,000 for Pandemic Unemployment Assistance (freelancers, self employed, part-timers, etc.) for a total of 899,000, this is the first week since the onset of the COVID pandemic that new jobless claims have been under 1M.
Thanks to The New York Times.
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