According to the Labor Department on Thursday, initial unemployment benefit claims decreased to their lowest last week, ever since the pandemic started. CNBC informed that “First-time filings for benefits totaled 360,000, in line with Dow Jones estimates and the best number since March 14, 2020.”
Unemployment Benefit Claims Reach 360,000
The 360,000 new applications for unemployment benefits represent a considerable reduction from the previous week’s upwardly revised 386,000.
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Similarly, continuing applications also dropped significantly by 126,000 to a total of 3.24 million. The change is also a new low for a U.S. job market that is bouncing back to pre-pandemic levels through some solid progress.
Despite the slight recovery, stock markets did not respond accordingly as futures pointed lower and government bond yields edged down following the release, as reported by CNBC.
“Those collecting benefits under all government programs also fell sharply, dropping by 449,642 to 14.2 million through June 19.” This is certainly progress unlike anything reported before COVID-19, but is still way short of the 33.2 million on the rolls last year.
More than 25 states have started cutting off on enhanced benefits implemented at the onset of the pandemic. This is seen as a move to push the unemployed into looking for jobs, as there were 13.8 million people receiving unemployment compensation as of late June, MarketWatch reports.
Experts agree that this flood of new workers will be met with a job market boasting a record level of job openings.
CNBC reports that the labor force participation is down 2.7% since February 2020, “and the total of workers counted as unemployed is more than 3.7 million higher.”
Meanwhile, a Morning Consulting poll says that the expiration of federal unemployment insurance benefits is bound to produce close to 2 million jobs through the end of 2021, “particularly as more UI recipients begin actively looking for work.”
The firm’s analysis predicts that the U.S. economy will fall short to pre-pandemic levels by roughly 4.7 million jobs, even when those on unemployment insurance return to work.
The cessation of unemployment insurance is large looming over those yet to find a job, as until late June, “32% of UI recipients indicated that their benefits expired within a month, and an additional 37% said that their benefits would expire between one to two months.”
Both figures account for a total of 69% of UI recipients aware that their benefits will expire by the end of August.