Good news for the American job market as jobless claims, which are new applications for unemployment benefits, fell to their lowest level since November.
For the week ending Feb. 20, first-time filings for unemployment insurance totaled 730,000. The filings for benefits are well below the Dow Jones’ projection of 845,000.
The number is also a decrease of 111,000 from the week prior. The previous week’s figure was revised down by 20,000 from 861,000 to 841,000. The 4-week moving average was 807,750, a decrease of 20,500 from last week’s revised average, a positive sign for the economy.
The numbers are a great sign following this year’s peak unemployment filings in January above 900,000. The numbers are consistent with growing confidence in America as more people begin getting vaccinated and people feel comfortable returning out into the world.
“It was a big drop, but I think the trend is going to continue because people are going out and spending more,” said Michelle Holder, a Ph.D. labor economist at John Jay College in New York.
Continuing claims in the U.S. all fell, decreasing 101,000 to 4.42 million, the lowest since Mar. 21. Both continuing claims and new claims remain well above their pre-pandemic peak despite strong showings this past week.
Some economists also believe that the drop in claims may be correlated to the extreme cold that hit Texas.
“The sharp drop in jobless claims likely is due to people in states hit hardest by last week’s huge storm, especially Texas, having better things to do than make jobless claims. We expect a rebound next week. The trend seems to be about flat, but we remain of the view that claims will soon start to trend down, slowly at first but then more quickly as the reopening of the economy accelerates in April and May,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The drop in jobless claims also masked pressure on the labor market measured by different metrics. There were over 1 million additional claims on the Pandemic Emergency program, which offers benefits to those whose regular benefits have run out.
The Pandemic Unemployment Assistance Program, which provides benefits to those who usually wouldn’t be eligible, also saw an increase in claims during the weeks of Feb. 13 and Feb. 20, more than 964,000 Americans filed under the program.
As of Feb. 6, just over 19 million Americans are receiving some compensation from one benefit program or another.
In more positive economic news, spending on long-lasting goods jumped 3.4% on the headline and 1.4% excluding transportation. Those numbers were well above what Wall Street projected them to be.
The second reading of GDP in the fourth quarter of 2020 showed an increase of 4.1%, an increase of one-tenth a percentage point, good but still below the projected number of 4.2%.
