U.S. Jobless Claims Fall to New Pandemic Low of 290,000

by Wall Street Rebel | Michael London | 10/21/2021 2:11 PM
U.S. Jobless Claims Fall to New Pandemic Low of 290,000

There's good news on the number of Americans applying for unemployment benefits. Last week the number of unemployment applications dropped to a new low since the beginning of the Covid-19 pandemic, which offers clear evidence that layoffs are declining as companies hold onto workers.

 

When sentiment polling of most Americans believes the economy is slowing down and the risk of both a recession and correction on Wall Street is hitting new highs. The unemployment numbers, actual claims are showing signs of dropping.

In the last week, applications for unemployment benefits dropped 6,000 to 290,000, the third straight drop, according to the Labor Department in Thursday's latest report. This amounts to the fewest people to apply for benefits since March 14, 2020, when the pandemic intensified.

While a 6,000 few applications for jobless aid may sound like a slight decline, it's essential to understand the stark contrast when looking at the bigger picture, which shows layoffs have fallen steadily from approximately 900,000 this past January to 290,000.

The dramatic drop in unemployment claims since January shows they're increasingly returning to normal. Still, several other areas of the job market haven't yet returned to what could be considered normal numbers. For example, hiring has slowed in the past two months, even as companies and other employers have posted a near-record number of open jobs.

The country's Federal Reserve Chair Jerome Powell had hoped more people would find work in September as schools reopened. It would ease child care constraints and enhance unemployment aid ended nationwide. However, that hasn't happened yet, and some economists are beginning to believe that many people who had jobs before the pandemic and lost them may have permanently stopped looking for work. It's one of the reasons that the Biden Administration is working so hard to keep provisions in the reconciliation bill that will include a $1.75T-$2.2T that has many incentives to get women back to work. They represent the most significant number of people who have not returned to work.

On Tuesday, Christopher Waller, a member of the Federal Reserve's Board of Governors, ignored the large number of women that have not returned to work and said that two million of the 22 million jobs lost to the pandemic might not return anytime soon because retirements have accelerated so quickly since COVID-19 hit.

Still, the Labor Department's Thursday report showed that the number of people receiving jobless aid continues to fall steadily. In the week of October 2, the latest data available, 3.3 million people received unemployment benefits, down from 3.6 million in the previous week. To help put that into context at that rate of decline, it could cause the total number to shrink to under 1.5 million people in the next 5 to 6 weeks. Compared to a year ago when nearly 24 million people were getting unemployment aid, it could legitimately be seen as a tremendous accomplishment.

One factor in all of this that shouldn't be ignored that mitigates the tremendous reduction of unemployment benefits is about 7 million people who lost jobless benefits in September after two emergency programs expired.

One of these programs provided aid to gig workers and the self-employed, who traditionally are not eligible to receive unemployment insurance. A second program covered workers who have been unemployed for longer than six months. And an extra $300 a week in federal unemployment benefits expired nationwide on September 6.

                       Initial jobless claims down 6,000 to 290,000, a post-Covid low - YouTube

 

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