Significance Of Lowest Jobless Claims Since 1969 For US Economy

US jobless claims set a more than 50-year low last week as the red-hot labour market shows few signs of cooling in the near-term. The Labour Department released its latest weekly jobless claims report Thursday.

Jobless claims fell by 28,000. Initial jobless claims, week ended March 19: 187,000 versus. 210,000 expected and a revised 215,000 during prior week. Continuing claims, week ended 12 March 1.350 million versus 1.400 million expected and a revised 1.417 million during prior week.

The four-week average for claims, which compensates for weekly volatility, fell to 211,750 from the previous week’s 223,250. In total, 1,350,000 Americans – a more than 50-year low – were collecting jobless aid the week that ended 12 March.

In April 2020, during the height of the first wave of the pandemic, weekly unemployment claims hit a record 6.6m and they stayed above 1m until August. But the remarkable recovery in the jobs market has coincided with soaring inflation and left many Americans unhappy with the Biden administration’s handling of the economy.

The majority of Americans (58%) surveyed for the latest Grinnell College national poll believe the economy will be worse a year from now and just 37% approve of Joe Biden’s handling of the economy, according to Gallup.
At least a dozen states are considering paying rebate checks of several hundred dollars directly to taxpayers to ease the burden of soaring prices for gas, food, utilities and other essentials.

A proposal from the Maine governor, Janet Mills, is among the most generous in a state where the cost of food and fuel has soared in recent months. The Democratic governor wants to send $850 to most residents as part of the state’s budget bill. The rebate “will help Maine people grapple with these increased costs by putting money directly back into their pockets”, Mills said.

In addition to the direct rebates, lawmakers and governors across the country are considering cuts to sales taxes, property tax relief and reducing or suspending state gas taxes.


At 187,000, new jobless claims improved for a back-to-back week and reached the lowest level since September 1969. Continuing claims also fell further to reach 1.35 million, the least since January 1970. The labour market has remained a point of strength in the US economy, with job openings still elevated but coming down from record levels as more workers rejoin the labour force from the sidelines.

None is losing their job with companies holding on tight to their workers despite the worrying signs of recession on the horizon from rising gasoline prices, stock market corrections and the horrific World War II photos coming out of Europe.

No wonder worker wages are soaring as company managers offer carrots where they used to give out sticks. The omicron variant is having no impact on the labour market and the anecdotal reports of massive labour market shortages are very, very real.

Going forward, however, some economists warned that new cases of the fast-spreading sub-variant of Omicron, known as BA.2, could at least temporarily disrupt mobility and economic activity across the country. As of this week, about one-third of COVID-19 cases in the US have been attributed to the sub-variant, though overall new infections have still been trending down from January’s record high. The impact on the labour market, and on demand in the service sector especially, remains to be seen.

Right now, US cases are in the sweet spot between the bottom of the initial Omicron wave and the impending explosion in BA.2 cases, but this probably won’t last long. The coming BA.2 wave could trigger a modest but visible pull-back in the discretionary services sector, thereby dampening consumption in the first month of the second quarter.

Still, many economists and policymakers have pointed out that the labour market withstood prior disruptions due to the Omicron wave earlier this year. Non-farm payrolls grew more than expected in each of January and February despite the outbreak.

And Federal Reserve Chair Jerome Powell reiterated his assessment of the labour market’s strength earlier this week, just days after calling the current job market “tight to an unhealthy level” in his post-Fed meeting press conference last week.

The labour market has substantial momentum. Employment growth powered through the difficult Omicron wave, adding 1.75 million jobs over the past three months,” Powell said in a speech Monday. “By many measures, the labour market is extremely tight, significantly tighter than the very strong job market just before the pandemic.

The tightness of the labour market has also strongly informed the Fed’s decisions in pressing ahead with tightening monetary policy, with the economy showing clear signs of strength and the ability to handle less accommodative financial conditions. Last week, the Fed raised interest rates by 25 basis points in its first rate hike since 2018.

St. Louis Fed President Jim Bullard, the lone dissenter of that decision who had called for a more aggressive 50 basis point rate hike last week, justified his vote in part given the strength of the US labour market even in the face of decades-high rates of inflation.

“US labour markets are today already stronger than they have been in a generation,” Bullard said in a statement. The next Federal Open Market Committee is scheduled to convene on 3 and 4 May.