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The number of claims filed for new unemployment benefits shrank to 340,000 in the most recent week reported, down from the previous week’s revised total of 354,000, to reach the lowest number since March 2020, according to U.S. labor department figures.
The number bested the 345,000 expected by economists surveyed by Bloomberg but remained well above the 200,000 weekly pre-COVID average.
Continuing claims also fell, reaching 2.75 million, notching a fifth consecutive week of smaller numbers and beating surveyed economists’ median forecast of 2.81 million.
TRENDPOST: As we noted in “Unemployment Claims Drop” (2 Feb 2021), official unemployment figures fail to include people who have stopped looking for work or who have exhausted their benefits. Therefore, the actual number of jobless people is higher than the government reports.
According to Lydia Boussour, an economist with Oxford Economics, when adjusting for people that have dropped out of the labor force and misclassifications, the actual unemployment rate is around 9 percent.
TREND FORECAST: The Biden Bounce is losing momentum now that the federal unemployment benefit has lapsed. Estimates are that the end of the $300 weekly jobless payment will cost the economy as much as $8 billion in consumer spending in coming months as the Delta variant and supply chain chaos continues to hamper the economic recovery.
The loss of the extra federal dollars will compound the economic sluggishness that supply chain disruptions and the second wave of the virus are creating.
These factors also dampen enthusiasm for investment in business creation in retail, restaurants, travel, entertainment, theatres, tourism, trade shows, conventions etc. and other sectors that depend on consumer spending.