The Labor Department said Wednesday that initial jobless claims fell to their lowest level since 1969.
The seasonally adjusted number of new applications for government benefits was 199,000, down 71,000 from the previous week.
The drop marks a milestone in the post-pandemic economic recovery. Weekly hits peaked at over six million in April 2020 as the coronavirus forced businesses and consumers to close. As recently as early January, amid the resumption of coronavirus in winter, the number of new state statements exceeded 900,000 in one week.
Since then, the number of applications for unemployment benefits has dropped sharply, but until recently remained well above the pre-pandemic level.
Unemployment insurance has become a key source of relief after the pandemic left more than 20 million people unemployed. To support the state’s disbursements, emergency benefits were funded from federal pandemic relief bills, although those disbursements ended in September, resulting in a cut of aid to 7.5 million people.
Despite the summer lull, the economy has shown signs of life lately. Employers added 531,000 jobs in October, and most economists expect growth to pick up in the last quarter of the year, fueled by healthy consumer spending.
“Today’s data confirms the historic economic progress we are making and the importance of building on that progress in the coming weeks,” President Biden said in a statement on the jobless claims report.
As one indicator of progress, Mr Biden pointed to the most recent tally of all types of unemployment benefits since early November, which showed that the number of people with continuing claims – those who are applying for benefits who have already made an initial claim – is 2.4. million. On the eve of Thanksgiving last year, the figure surpassed 20 million.
Of late, the biggest economic concern is not unemployment, but inflation, which is soaring amid labor shortages, supply chain disruptions and rising energy prices.
In a separate report Wednesday, the Commerce Department said that household spending rose 1.3 percent in October and personal income jumped 0.5 percent, excluding inflation. It also showed that prices rose 5 percent in the 12 months to October.
The jobless claims data, while certainly good news, may not be as good as it sounds. On an unadjusted basis, government claims rose in the last week. And employment remains 4.2 million below the February 2020 level, before the pandemic.
“While the labor market is recovering, we think the recent decline in claims may be exaggerated,” said Gregory Daco, chief US economist at Oxford Economics. “We suspect last week’s decline may have been exaggerated due to bizarre seasonal adjustment factors, and we think we may see a recovery in the coming weeks.”