WASHINGTON (Reuters) – The number of Americans filing new jobless claims fell to a one-year low last week, providing a powerful boost to an economy on the brink of stronger growth as the situation improves. public health and temperatures rise.
But the job market is not out of the woods just yet, with the Labor Department’s weekly jobless claims report on Thursday showing 18.953 million people were still receiving unemployment checks as of early March. It will likely take years to fully recover from the scars of the pandemic.
President Joe Biden, in his first press conference, highlighted the improvement in the economic outlook and the decline in claims to their lowest level since the COVID-19 pandemic broke out in the United States just over a year ago. .
“There are still too many Americans out of work, too many families are hurting and I still have a lot of work to do,” Biden said. “But I can tell you, American people, help is here and hope is on the way.”
Initial claims for state unemployment benefits fell from 97,000 to 684,000 seasonally adjusted for the week ending March 20, the lowest level since mid-March. The data for the previous week was revised to show 11,000 more requests received than previously reported. Economists polled by Reuters had forecast 730,000 requests for the past week.
Including a government-funded program for the self-employed, concert workers and others who do not qualify for regular state programs, 898,534 people filed claims last week, dropping below 1 million for the first time since the pandemic began.
The decline was led by Ohio, which has been dogged by fraud, and Illinois. Claims skyrocketed in the second week of March, likely due to backlogs being processed after severe winter storms in Texas and other parts of the heavily populated southern region.
The freeze in the second half of February, which also hit other parts of the country, depressed retail sales, home construction, factory production, orders and shipments of manufactured goods last month.
Warmer weather, the approval of the White House’s $ 1.9 trillion COVID-19 pandemic rescue package, and increased vaccines are expected to boost activity beginning in March.
Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell gave an upbeat note on the economy in remarks to lawmakers this week.
US stocks were mixed. The dollar rose against a basket of currencies. The prices of US Treasuries were mostly lower.
CORPORATE EARNINGS FALL
But massive fiscal stimulus, which extended government-funded unemployment assistance, including a $ 300 weekly supplement, through Sept. 6, could keep claims high as some people reapply for benefits. Claims rose to a record 6.867 million in March 2020. They remain above their peak of 665,000 during the Great Recession of 2007-2009. In a healthy job market, claims typically range from 200,000 to 250,000.
Employment is 9.5 million jobs below its peak in February 2020. Economists say it could take at least two years for the economy to regain all of the 22.4 million jobs lost in March and April. from last year.
The full recovery of the labor market could take even longer, with the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, nearing a minimum of 47 years. More than 4 million workers have left the workforce since February 2020.
The number of people receiving benefits after an initial week of assistance decreased by 264,000 to 3.87 billion in the week ending March 13. More people are finding work, while others are exhausting their eligibility for benefits, limited to 26 weeks in most states.
Approximately 5.6 million people received extended benefits during the week ending March 6. Another 1.1 million were in a state program for those who have exhausted their initial six months of aid.
A separate report from the Commerce Department on Thursday showed that gross domestic product rose at an annualized rate of 4.3% in the fourth quarter, revised up from the 4.1% pace reported last month.
Goods-producing industries grew at a rate of 6.1%, supported by gains in construction and the manufacture of computer and electronic products, as well as metal products.
Service industries expanded at a rate of 4.9%, driven in part by finance and insurance, health and social care, and professional, scientific and technical services. They were partially offset by decreases in accommodation and food services, public services and educational services.
The government contracted at a rate of 1.1%. Seventeen of the 22 industries contributed to fourth quarter GDP growth. The economy grew at a record rate of 33.4% in the third quarter.
Earnings fell $ 31.4 billion last quarter after rising $ 499.6 billion in the July-September period. They fell $ 130.2 billion in 2020 after rising $ 7.6 billion in 2019.
The worst is likely over, and the economy is forecast to grow by as much as 7.5% in the first quarter. Growth this year could exceed 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.
“We believe there is ample room for corporate earnings to increase as the company’s revenue recovers markedly and margins remain well supported,” said Lydia Boussour, lead US economist at Oxford Economics in New York. “Improving health conditions, expanding vaccine distribution, and generous fiscal stimulus will form a powerful growth cocktail.”
Reporting by Lucia Mutikani Edited by Chizu Nomiyama, Andrea Ricci and Paul Simao