Help wanted signs are everywhere, so it should come as no surprise that employers let go of very few workers.
Yet the number of unemployed continues to beat expectations. New applications for unemployment benefits fell by 71,000 to 199,000 in the week ending November 20, the lowest level of initial claims since 1969.
Economists had predicted a slight drop to 264,000.
The staggering drop in new claims, which is a proxy for layoffs, is a sign that the labor market is recovering. If it continues, the low level of requirements could cause the Federal Reserve to go faster in downsizing its bond purchases and ultimately raising interest rates. The unexpected fall could also cause some Capitol Hill lawmakers to hesitate to approve 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 average of injuries, which offsets weekly ups and downs, also fell – by 21,000 to just over 252,000, the lowest since mid-March 2020, when the pandemic hit the economy.
Since peaking at 900,000 in early January, applications have fallen steadily and now dropped below their pre-pandemic level of around 220,000 per week. Unemployment benefit claims are a proxy for layoffs.
In total, 2 million Americans collected traditional unemployment checks in the week ending November 13, a slight decrease from the week before.
“Overall, expect continued volatility in headline figures, but the trend remains very slowly lower,” Contingent Macro Advisors wrote in a research note.
Until September 6, the federal government had supplemented state unemployment insurance programs by paying an additional payment of $ 300 a week and extending benefits to concert workers and to those who were out of work for six months or more. Including the federal programs, the number of Americans receiving some form of unemployment assistance peaked at more than 33 million in June 2020.
The labor market has staged a remarkable comeback since the spring of 2020, when the coronavirus pandemic forced companies to close or cut back on opening hours and kept many Americans at home as a security measure. In March and April last year, employers laid off more than 22 million jobs.
But government emergency checks, super-low interest rates and the proliferation of vaccines combined to give consumers confidence and financial leeway to start spending money again. Employers struggling to meet an unexpected increase in demand have made 18 million new employees since April 2020 and are expected to add another 575,000 this month. Yet the United States still lacks the 4 million jobs it had in February 2020.
Companies are now complaining that they can not find workers to fill job openings, almost a record 10.4 million in September. Workers who, for the first time in decades, find themselves with bargaining power become more voters in terms of jobs; record-high 4.4 million stopped in September, a sign that they have confidence in their ability to find something better.
Additional fiscal or monetary stimulus is now likely to exacerbate inflation rather than a meaningful improvement in the job situation in the US