Jobless claims fell to their lowest level of the pandemic last week as stronger hiring and consumer spending drive a U.S. economic revival.
Worker filings for unemployment benefits, a proxy for layoffs, fell to 684,000 last week from 781,000 a week earlier. Claims are now at the lowest point since mid-March of last year, before lockdowns triggered millions of layoffs. They are also below the pre-pandemic high of 695,000, a threshold not crossed for 52 weeks.
“The recovery is really hitting full steam again, and all of the conditions will be in place for a real, explosive liftoff in the summer when hopefully we’ve reached a higher vaccination threshold,” said Julia Pollak, labor economist at jobs site ZipRecruiter.
The four-week average for jobless claims, which smooths out volatility in the weekly figures, also fell to a pandemic low of 736,000.
Still, the benefits of the recovery aren’t yet reaching everyone. Millions of people are suffering from spells of long-term unemployment. Total continuing claims, a proxy for the number of people receiving benefits, rose to 19 million in the week ended March 6, from 18.2 million a week earlier. More people received aid through two federal pandemic programs that were recently extended, though those figures have been particularly volatile.
Widespread vaccinations, easing business restrictions and government stimulus are helping spur the early stages of an economic boom. Americans are ramping up spending on in-person services such as restaurants, gyms, hotels and salons that were battered by the coronavirus pandemic. U.S. employers added 379,000 jobs in February, and the unemployment rate ticked down to 6.2%.
The economic revival is arriving sooner than many economists projected at the start of the year, before a $1.9 trillion stimulus package was signed into law.
Widespread vaccine availability will allow the pandemic to fade, along with consumer fear and business restrictions. As the economy further reopens, consumers will spend even more on services such as restaurants, airlines and spas. Household savings totaled $3.9 trillion in January, up from $1.4 trillion in February 2020, before the pandemic hit the U.S. economy. A third round of stimulus checks recently started showing up in households’ bank accounts, leaving many Americans with more cash to spend.
Economists surveyed by The Wall Street Journal this month raised their average forecast for 2021 economic growth to 5.95%, measured from the fourth quarter of last year to the same period this year, from a 4.87% projection in February’s survey. The higher figure would mark the fastest such pace in nearly four decades, following a steep downturn last year.
Growth started to pick up last summer. In the final months of 2020, gross domestic product advanced at an annual rate of 4.3%, up from an earlier estimate of 4.1%, the Commerce Department said Thursday. A boost to inventories, and a slight improvement for state- and local-government spending accounted for most of the upward revision.
The National, an Athens, Ga.-based restaurant, is planning to expand hours and is seeking to hire a cook and a couple of servers, said Peter Dale, executive chef. Though weaker sales during the pandemic have kept staffing and hours down from pre-pandemic levels, the tide is turning as the weather warms up and vaccines are distributed, Mr. Dale said.
Older people who are vaccinated have recently been coming into the restaurant for the first time in a year, he said. “That’s been very encouraging and exciting,” Mr. Dale said. “They’ve missed getting a big plate of vegetables.”
Still, Mr. Dale is unsure whether key drivers of sales–business and entertainment meetings–will fully return. “That’s where I get a little nervous about the future,” he said.
The IRS sent roughly 90 million stimulus checks to Americans in March. WSJ’s chief economics commentator Greg Ip explains why stimulus checks alone are unlikely to spur inflation. Photo Illustration: Carlos Waters
President Biden, a Democrat, recently signed a $1.9 trillion relief package into law that provides stimulus checks to many households and extends supplemental jobless benefits originally set to expire March 14. Workers claiming unemployment benefits can now receive an additional $300 a week through early September.
Andrew Schmidt and his wife, Anna Schmidt, are beneficiaries of the latest round of government aid. Mr. Schmidt, 32 years old, of Nashville, Tenn., was laid off from his job as an audio engineer specializing in live-music events last April. With nearly all concert tours still out of commission, Mr. Schmidt has been unable to find anything more than odd jobs since then. Though his 33-year-old wife was able to keep her job as a bookstore manager, the Schmidts lost about half of their gross income in 2020.
Expanded unemployment benefits and stimulus checks, however, have helped the couple avoid a dire financial situation, he said.
“The stimulus…has allowed us to cover all bills and extra expenses without completely draining our savings, though they have been reduced considerably,” Mr. Schmidt said. Had they depended on Ms. Schmidt’s income and regular state unemployment benefits, the couple would by now have been forced to rack up credit-card debt to cover expenses.
Some state claims numbers continue to be plagued by attempted fraud, a problem throughout the pandemic. In recent months, thousands of Americans have received 1099-G tax forms, surprising them with the news that they are victims of unemployment-insurance fraud.
The U.S. Labor Department has launched a website that outlines steps identity-theft victims should take to report and address cases of unemployment fraud.