Initial claims for state unemployment benefits in the United States fell for the fourth consecutive week, hitting their lowest levels since the coronavirus pandemic first shuttered many businesses and sent workers home in March 2020.
Seasonally adjusted initial claims for unemployment assistance hit a pandemic low of 348,000 for the week ending August 14, down 29,000 from the previous week, the US Department of Labor said Thursday, a sign the US labour market is picking up steam even as cases of the coronavirus surge in some states, mostly among unvaccinated people.
Continuing claims for unemployment benefits also fell, hitting a pandemic low of 2.8 million for the week ending August 7, a decrease of 79,000 from the previous week’s revised figure.
But jobless claims still remain elevated from the beginning of the pandemic more than a year and a half ago. Initial jobless claims stood at 256,000 on March 14, 2020, and continuing claims for unemployment assistance were 1.7 million at the time.
Still, this week’s figures are another sign that the US economy continues to recover after the darkest days of the coronavirus pandemic, and those figures are also likely to play into the ongoing political debate about when the US Federal Reserve should consider pulling back off some of its economic support.
‘Substantial further progress’
US President Joe Biden and his economic team have repeatedly argued that strong support continues to be necessary to ensure the US economy makes a full recovery.
Rising levels of inflation, however, have led members of the Republican party to argue Biden and his team are running the economy too hot, pumping in money when the recovery has already taken hold. Dozens of governors, all of them Republicans, already moved to end the federal $300 top-up to state unemployment benefits before it was set to expire in September.
But the Federal Reserve has said it will continue supporting the economy until it meets its goals of maximum employment and inflation at the rate of 2 percent in the longer term. Fed officials have repeatedly said they view the current level of inflation as transitory, the result of supply chain bottlenecks and pent-up demand.
“Substantial further progress” has been the phrase used by the Fed to indicate when it might taper off its current level of bond buying, which includes at least $80bn in Treasury securities per month and at least $40bn in agency mortgage‑backed securities per month.
But at the latest Federal Open Market Committee meeting, leaders discussed tapering off asset purchases before the end of 2021, meeting minutes show. The Fed released minutes from the July 27-28 meeting on Wednesday.
“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year because they saw the Committee’s ‘substantial further progress’ criterion as satisfied with respect to the price-stability goal and as close to being satisfied with respect to the maximum-employment goal,” the minutes stated.
But there are varying views on that timeline, with other participants in the meeting supporting putting off tapering until early 2022 to give the labour market more time to recover.
“Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year because they saw prevailing conditions in the labor market as not being close to meeting the Committee’s ‘substantial further progress’ standard or because of uncertainty about the degree of progress toward the price-stability goal,” according to the minutes.
The Fed also voted to keep interest rates near zero. The Open Market Committee is next set to meet from September 21 to 22.
The data show Americans are heading back to work, but the impact the highly contagious Delta variant of the coronavirus could have on everything from school reopenings to business restrictions this fall remains uncertain.
In a press release Wednesday, the Fed reiterated that much of the US’s continued progress will depend on whether it can continue to vaccinate people.
“The path of the economy continues to depend on the course of the virus,” the Federal Open Market Committee said in a statement Wednesday. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
Only 50 percent of the US adult population is fully vaccinated, according to the latest report from the Centers for Disease Control and Prevention (CDC), with nearly 60 percent having received only their first shot of a two-shot vaccine regimen. The number of vaccinations given by August 12 increased by 1 percentage point from the week before.
But COVID-19 cases, hospitalisations and deaths have all increased at a much faster pace. CDC data show daily new cases increased by 18.4 percent for the week ending August 13, while hospitalisations increased by 29.6 percent and deaths increased by 21 percent.
While the recent surge in cases has led some states to reimpose mask mandates and some firms have announced they won’t be requiring employees to return to the office as planned in September, it remains to be seen whether states and cities will reimpose capacity restrictions on restaurants, bars and event venues, potentially leading to layoffs of service industry workers again.