US Jobless Claims declined to its Lowest Level since Covid-19 pandemic started

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Americans applying for jobless aid declined to its lowest level since the coronavirus pandemic began a year ago. On Thursday, the US Labor Department said that around 684,000 people applied for unemployment benefits in the week ending March 20. Another 241,000 people applied for Pandemic Unemployment Assistance, a federal program for the self-employed and gig workers. A senior fellow at the Century Foundation, Andrew Stettner said, “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”. A typical week saw around 250,000 new unemployment claims prior to the pandemic. The number never topped 700,000, even during the depths of the Great Recession.

Most economists have predicted that fewer people will file for benefits in the coming weeks as more people receive vaccines and businesses reopen. Ian Shepherdson of Pantheon Macroeconomics said, “We expect claims to fall sharply as the economy reopens fully across the second quarter”. Point to be noted that 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 started to be paid out. The Treasury Department said 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, the fastest rate of expansion since 1984. The weekly unemployment claims figure has been considered a reflection of the pace of layoffs.

But, that connection has weakened during the pandemic, like fraud, computer problems, and a backlog of claims has distorted many states’ jobless aid data. It has been particularly true for the federal program that covers self-employed and gig workers because this data has fluctuated wildly in many states. 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 says 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. At least 19 million people continue to collect jobless benefits as of early March. It is noteworthy that the US still has 9.5 million fewer jobs today than it did before the pandemic.