New jobless claims plummet to 199K, lowest level since 1969

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The number of Americans seeking new jobless benefits fell last week, falling from pre-pandemic levels to the lowest level since 1969, the Fed said on Wednesday.

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As of last week, early filings for unemployment benefits, seen as a proxy for layoffs, fell to 199,000, down 71,000 from the previous week’s revised level of 270,000, according to data released Wednesday by the Labor Department.

Economists polled by the Dow Jones expect new claims to drop to 260,000 after seeing a decline for five consecutive weeks.

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“Wow!” Mark Hamrick, senior economic analyst at Bankrate, said in response to the new report.

“It’s fair to say that we didn’t see it coming. It’s really important to get new claims below the 200,000 level for the first time since the pandemic started, and shows improvement.”

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Hamrick said that “the stresses associated with high prices, lack of supply and available job candidates are weighed against low levels of layoffs, wage benefits and falling unemployment rates.”

“The growth prospects for the foreseeable future will be equal, but in the context of historically high inflation, which will somewhat ease its grip on the economy in the coming year,” he said.

While there is still uncertainty regarding the status of the pandemic, Hamrick said he expects the economic recovery to continue next year.

After ticking up in September, new claims have been falling steadily since then as the labor market slowly recovers, but Wednesday’s report showed the figure lower, suggesting a strong recovery in the labor market this month.

Weekly new claims have dropped significantly from the 2020 peak of about 6.1 million new claims a week, and are now down from the 200,000 new claims per week seen before the pandemic.

National studies on employment in the past three months have failed to impress most economists.
Brett Carlson / Getty Images

Still, the recent resurgence of COVID-19 could threaten reforms in the labor market, which could once again take people off work, sending more claims once again.

Wednesday’s report also showed that there has been a decline of 60,000 in claims issued from last week’s revised levels, according to the new data. The figure stood at around 6 million in the same period last year, which was hit by the pandemic.

The Fed said just over 2 million Americans remain on traditional state unemployment benefits.

A hiring sign hangs in a Taco Bell window.
In October, 531,000 jobs were added to the market and unemployment fell to 4.6 percent.
Rich Pedroncelli / AP
A graph showing declining unemployment claim rates.
A graph showing declining unemployment claim rates.

The Labor Department reported earlier this month that companies managed to add 531,000 jobs in October – the biggest monthly gain in three months – and the unemployment rate fell to 4.6 percent from 4.8 percent a month earlier.

However, there are still more than 4 million jobs missing in the economy compared to just before the pandemic.

The latest jobless claims report comes two weeks after the Fed announced that the Labor Department’s Consumer Price Index, which measures energy and food costs along with a basket of goods and services, in October compared with a year earlier. jumped 6.2 percent in the U.S., its biggest year-over-year spike in more than 30 years.

Job applicant interview.
There are still more than 4 million jobs missing in the economy compared to just before the pandemic.
Brett Carlson / Getty Images

The massive price hike has drawn criticism from some economists and politicians who blame the Federal Reserve, saying Chairman Jay Powell pumped too much money into the economy through emergency pandemic programs.

The scorching inflation readout prompted some fresh calls for the Federal Reserve to accelerate the tapering of its bond-buying program and raise interest rates as soon as possible.

But the Fed has insisted that cost hikes are only temporary and it would be a mistake to raise interest rates before the employment picture improves.

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