Signs asking for help are everywhere, so it should come as no surprise that employers are laying off very few workers.
Yet jobless claims continue to exceed expectations. New claims for unemployment benefits fell from 71,000 to 199,000 in the week ended November 20, the lowest level of initial claims since 1969.
Economists had forecast a smaller drop to 264,000.
The dramatic drop in new claims, which are an indicator of layoffs, is a sign that the labor market is recovering. If it persists, the low level of claims could prompt the Federal Reserve to accelerate its reduction in bond purchases and possibly raise interest rates. The unexpected drop could also make some Capitol Hill lawmakers hesitate to allow the hundreds of billions of dollars in deficit spending included in the Biden administration’s Build Back Better legislative package.
The Associated Press provides further details:
The four-week claims average, which eases weekly highs and lows, also fell – from 21,000 to just over 252,000, the lowest since mid-March 2020, when the pandemic hit the economy .
Since surpassing 900,000 in early January, demands have steadily declined and have now fallen below their pre-pandemic level of around 220,000 per week. Unemployment assistance claims are an indicator of layoffs.
Overall, 2 million Americans collected traditional unemployment checks in the week ending November 13, down slightly from the week before.
“Overall, expect continued volatility from the main numbers, but the trend remains very slowly downward,” Contingent Macro Advisors wrote in a research note.
Until September 6, the federal government had supplemented state unemployment insurance programs by making an additional payment of $ 300 per week and extending benefits to concert workers and those who were out of work for six months or more. Including federal programs, the number of Americans receiving some form of unemployment assistance peaked at more than 33 million in June 2020.
The job market has made a remarkable comeback since the spring of 2020, when the coronavirus pandemic forced businesses to shut down or cut hours and kept many Americans at home as a health precaution. In March and April of last year, employers cut more than 22 million jobs.
But government relief checks, very low interest rates and the rollout of vaccines have combined to give consumers the confidence and the financial means to start spending again. Employers, scrambling to meet an unexpected increase in demand, have made 18 million new hires since April 2020 and are expected to add 575,000 this month. Yet the United States remains 4 million fewer from the jobs it had in February 2020.
Companies are now complaining that they cannot find workers to fill vacancies, a record close to 10.4 million in September. Workers, who find themselves with bargaining power for the first time in decades, are becoming more demanding when it comes to jobs; a record 4.4 million dropouts in September, a sign that they are confident in their ability to do better.
Additional fiscal or monetary stimulus are likely to exacerbate inflation rather than significantly improve the employment situation in the United States