The number of Americans filing for new jobless claims and benefits has decreased to its lowest level in nearly 18 months.
The Labor Department revealed this week that weekly jobless claims have decreased to almost pre-pandemic levels. People on state unemployment have also hit March 2020 levels when the pandemic was initially starting and shutting down multiple businesses.
New job openings have increased exponentially throughout the nation as well, which could explain this new data. Some economists are arguing that these openings could put pressure on the Federal Reserve to announce when it will begin scaling back on its monthly bond-buying program.
“There is likely to be a fierce debate at the coming Fed meeting on how tight the labor market is, but if policymakers focus on the most timely data we’ve got, they will realize that the labor market is close to meeting their more stringent criteria for an interest rate hike let alone the trigger for tapering,” said Chris Rupkey, chief economist at FWDBONDS in New York.
“Initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 for the week ending with September 4th, the lowest level since mid-March 2020. Economists forecast 335,000 applications for the latest week.”
Some economists have also argued that the second straight week of a decline in claims could’ve surged after Hurricane Ida destroyed integral US offshore energy production and knocked out a lot of power. Claims have dropped from a record 6.149 million, recorded in April 2020, down to around 250,000. California, Virginia, Michigan, Florida, Georgia, New York, Missouri, and Tennessee have all seen the largest decrease in claims.
The decrease in claims suggests that the US labor market is coping well with the recent surges of the Delta variant of Covid-19.
“With Delta cases appearing close to a peak in the United States, we expect hiring to pick back up in September, although the pace of job growth is unlikely to return to the robust pace of early summer. Job openings surged to a record 10.9 million at the end of July. Labor market tightness was underscored by the Fed’s Beige Book report on Wednesday, based on information collected on or before Aug. 30, which showed all Districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity,” said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina.
“About 8.4 million people are officially unemployed. This labor market imbalance has been blamed on lack of affordable childcare, fears of contracting the coronavirus, as well as pandemic-related retirements and career changes.”
It’s expected that the employment rate in the US will continue to increase, especially considering the government is planning on ending its unemployment fund benefits as it relates to the pandemic this Monday.
However, the spreading of the Delta variant and increase in Covid case numbers in the US has many economists concerned that the government is prematurely taking away these extremely necessary financial services.
“There is also no guarantee that the expiration of the expanded benefits will force the unemployed to look for work. An early termination of these benefits by about 25 states led by Republican governors over the summer did not expand the labor pool. Evidence from these states that ended benefits programs early suggests there might not be a sudden substantial return to work as unemployment benefits end,” said Veronica Clark, an economist at Citigroup in New York.
Reports suggest that the number of people continuing to receive pandemic-related aid from the government has dropped by 22,000 to 2.783 million in the last week of August. At least 12 million individuals were receiving benefits under all programs during the second to last week of August, suggesting that a majority of these people were forced to stop applying for their benefits based on government policy, not based on the fact that they’re newly employed.
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