WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell to a low level last week, giving a powerful boost to an economy that is about to grow stronger as the public health situation grows and temperatures rise.
But the labor market is not out of the woods yet, with the weekly jobless claims report from the Labor Department on Thursday showing that 18.953 million people were still receiving unemployment checks in early March. It may take years for full recovery from the spread of the pandemic.
President Joe Biden in his first press conference highlighted the clear economic outlook with claims falling to its lowest level since the COVID-19 pandemic across the United States just over a year ago.
“Too many Americans are still out of work, too many families are hurting and I still have a lot of work to do,” Biden said. “But I can tell you Americans, there is help here and hope is on the way.”
Initial claims for state unemployment benefits fell from 97,000 to 684,000 seasonally adjusted for the week ending March 20, the lowest level since mid-March. The previous week ‘s data was revised to show 11,000 more applications received than previously reported. Economists surveyed by Reuters had forecast 730,000 claims for the most recent week.
Including a government-funded program for the self-employed, gig workers and others not eligible for the regular state programs, 898,534 people applied last week, falling under one million for the first time since the pandemic began.
The decline was led by Ohio, which is deceived by fraud, and Illinois. Claims were raised in the second week of March, possibly as reserves after severe winter storms in Texas and other parts of the densely populated Southern region.
The deep frost in the second half of February, which also affected other parts of the country, affected retail sales, home construction, factory production, orders and shipments of manufactured goods last month.
Warmer weather, travel of the White House’s $ 1.9 trillion COVID-19 pandemic rescue package and more vaccines boost activity is expected to begin in March.
Finance Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell struck an optimistic note about the economy in evidence before lawmakers this week.
U.S. stocks were mixed. The dollar rose against a basket of currencies. U.S. Treasury prices were largely lower.
The PROFITS CORPORATE FALL
But the massive fiscal stimulus, which extended government-funded unemployment assistance, to include $ 300 a week in earnings, through Sept. 6, could boost claims as some people reapply for benefits. Applications were peaked at 6.867 million in March 2020. They remain above their peak of 665,000 during the Great Depression of 2007-2009. In a healthy labor market, applications are typically in the range of 200,000 to 250,000.
Employment is 9.5 million lower than the peak in February 2020. Economists say it could take at least two years for the economy to recover from the 22.4 million jobs lost in March and April last year. last year.
A full labor market recovery could take even longer, with the level of labor team participation, or the proportion of working-age Americans who have work or are looking for one, close to the level low 47-year-old. More than 4 million employees have dropped out of the workforce since February 2020.
The number of people receiving benefits after an initial aid week fell by 264,000 to 3.870 million a week to end on March 13. More people are finding work, and others are finding that they are entitled to benefits, limited to 26 weeks in most states.
Approximately 5.6 million people were on extended benefits during the week ending March 6. A further 1.1 million had a state program for those who have spent their six months of aid.
A separate report from the Commerce Department on Thursday showed that gross domestic product had risen at an annual rate of 4.3% in the fourth quarter, revised up from the 4.1% pace reported last month.
Manufacturing industries grew at a rate of 6.1%, supported by gains in the construction and manufacture of computer and electronic products as well as fabricated metal products.
Services industries expanded at a rate of 4.9%, partly driven by finance and insurance, health care and social support, and professional, scientific and technical services. They were partially reduced by a reduction in accommodation and food services, facilities and education services.
The Government maintained a contract at 1.1%. Seventeen out of 22 businesses contributed to GDP growth in the fourth quarter. The economy grew at a record high of 33.4% in the third quarter.
Profits fell $ 31.4 billion in the last quarter after rising $ 499.6 billion in the July-September period. They shook $ 130.2 billion in 2020 after rising $ 7.6 billion in 2019.
At its worst, the economy is expected to grow at a rate of 7.5% in the first quarter. Growth this year could exceed 7%, the fastest rate since 1984. The economy contracted by 3.5% in 2020, the worst performance in 74 years.
“We believe there is ample room for corporate profits to rise as companies’ incomes rise sharply and margins are well supported,” said Lydia Boussour, chief economist at US at Oxford Economics. in New York. “Improving health conditions, expanding vaccine circulation, and generous fiscal stimulation will make a cock grow powerful.”
Reporting by Lucia Mutikani Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao