Last week saw a drop in the number of Americans receiving unemployment benefits. This is another indicator that the market continues to recover quickly from the coronavirus recession.
According to the Labor Department, unemployment claims fell by 24,000 to 400,000.
From a peak of 904,000 applications in January, the weekly applications have been falling steadily since then. They are still high by historical standards. Before COVID was introduced in the United States in March 2020 claims were at around 220,000 per week.
After the fall of the spring 2020, the economy and the job market have been slowly recovering. This year’s introduction of vaccines has helped businesses reopen and expand their hours, and compelled cooped up consumers to return to bars, restaurants and shops.
The health crisis is not over. As the highly contagious delta variant spreads among unvaccinated people, COVID-19 cases continue to rise. In the United States, there are now more than 50,000 cases per day. This is up from 12,000 in June. If governments restrict business activity or consumers opt to stay home to protect themselves, the increase in cases could have negative economic consequences.
Currently, however, many businesses are unable to find workers because of the strength of the economy. Employers advertised a record 9.2 Million job openings in May. This is more than any applicants can fill.
22 states responded to concerns about a shortage of labor and decided to discontinue a federal $300-a week federal employment benefit to help offset the economic impact from the pandemic. Two other federal programs have been cancelled by twenty states. One provides benefits for the self-employed, gig workers, and another is available to those who have been unemployed for six months or more. The nationwide expansion of the programs is set to expire Sept. 6.
In total, 13.2 Million people received some form of jobless assistance in the week ending July 10, a decrease of 31.9 million from a year earlier.
Rubela Farooqi (chief U.S. economist, High Frequency Economics), wrote that there were no weekly ups or downs. “The trend in total filings should stay downward over the coming weeks,” she said in a research paper. “Overall, job growth should pick-up and labor shortages should ease as near term constraints – such as virus concerns, child care issues, and enhanced unemployment benefits – diminish. However, rising cases of virus could pose a threat to the economy and the labor market.