The number of new applications for unemployment benefits rose by 28,000 last week to 222,000 after plummeting by a shocking amount the week before, the Labor Department reported Thursday.
The number of jobless claims was fewer than forecasters expected, but it is the second-lowest mark of the pandemic recovery and a sign of labor market tightness. Throughout the year, initial jobless claims have ticked down as fewer people suffer layoffs and require economic assistance from the government.
Last week, claims plunged by a precipitous 76,000 to 194,000 — the lowest level for initial claims in 50 years. That week’s number might have been pushed downward by problems with the Labor Department’s methods for adjusting for seasonal variation, but this week’s very low claims level indicates that the underlying rate of layoffs is very low.
“Factoring out the previous week’s adjustment noise, which pushed the count artificially low, today’s release of initial unemployment claims puts us almost back to pre-pandemic levels,” said Robert Frick, corporate economist at Navy Federal Credit Union. “That’s great news, but it comes with the caveat that the new wave of delta cases, and the specter of omicron cases, could push layoffs higher in coming weeks.”
CEOS MORE OPTIMISTIC ABOUT ECONOMY THAN ANY TIME IN PAST 20 YEARS, SURVEY SHOWS
While the sliding number of new claims is on balance good news for the economy, the United States is millions of jobs short of pre-pandemic levels, when unemployment sat at an ultra-low 3.5%. The current rate of unemployment is 4.6% after a better-than-expected October jobs report that found the economy added 531,000 jobs that month.
The Bureau of Labor Statistics will release the jobs report for November on Friday. The consensus among economists is that about 550,000 jobs were added.
Nevertheless, the economy faces several major challenging dynamics.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The number of people quitting their jobs is the highest since the U.S. began keeping records about two decades ago, equivalent to about 3% of the country’s labor force. Generally, a high quitting rate is interpreted as a sign of labor market strength, as it indicates that workers are confident enough in their prospects to leave their jobs. Some employers, though, have complained that it has been difficult to find workers and have had to hike wages and offer incentives in an effort to staff their companies.
Prices have also been soaring. Inflation clocked in at 6.2% for the year ending in October, the highest level in three decades. Some fear that the Biden administration’s federal spending, coupled with the Federal Reserve keeping interest rates at near-zero, could be adding too much fuel to the inflationary fire.
