US jobless claims decline epidemically, Fed eyes narrow | Business and Economics News
Initial claims for state unemployment benefits in the US fell for the fourth consecutive week, hitting their lowest levels since the coronavirus pandemic first shut down many businesses and sent workers home in March 2020.
The US Labor Department said on Thursday that seasonally adjusted initial claims for unemployment assistance reached an epidemic low of 348,000 for the week ending August 14, down 29,000 from the previous week, in a sign that the US labor market is regaining strength even as cases of the coronavirus spread in some states, mostly among unvaccinated people.
Continuing claims for unemployment benefits also fell, hitting an epidemic low of 2.8 million for the week ending August 7, down 79,000 from the previous week’s revised figure.
But unemployment claims have remained high since the pandemic began more than a year and a half ago. Initial jobless claims were 256,000 on March 14, 2020, and continuing claims for unemployment assistance stood at 1.7 million at that time.
However, this week’s numbers are yet another sign that the US economy continues to recover after the darkest days of the coronavirus pandemic, and these numbers are also likely to play a role in the ongoing political debate over when the US Federal Reserve should consider a step back. its economic support.
‘More big progress’
US President Joe Biden and his economic team have repeatedly argued that strong support is still necessary to ensure a full US economic recovery.
However, rising levels of inflation have led members of the Republican Party to argue that Biden and his team are running the economy too hard, pumping in money when the recovery has already taken hold. Dozens of conservatives, all Republicans, have already moved to end the federal $300 increase in state unemployment benefits before it expires in September.
But the Fed said it will continue to support the economy until it achieves its long-term goals of maximum employment and 2 percent inflation. Federal Reserve officials have repeatedly said they view the current level of inflation as temporary, as a result of supply chain bottlenecks and pent-up demand.
“Extra significant advance” was the phrase the Fed used to indicate when it might ease the current level of bond purchases, which includes at least $80 billion in Treasuries per month and at least $40 billion in mortgage-backed securities. Real estate agency for each month.
But at the last meeting of the Federal Open Market Committee, leaders discussed reducing asset purchases before the end of 2021, according to the meeting minutes. The Federal Reserve released the minutes of the July 27-28 meeting on Wednesday.
Looking ahead, most of the participants noted that, provided that the economy developed broadly as they expected, they considered it might be appropriate to start reducing the pace of asset purchases this year because they saw the criterion of the Committee’s “extra significant progress” being satisfied, the minutes said. in relation to the objective of price stability and closer to being satisfied in relation to the objective of maximum employment.”
But there are mixed opinions on this timeline, with other meeting participants in favor of postponing tapering until early 2022 to give the labor market more time to recover.
“Many others have indicated, however, that lowering the pace of asset purchases is likely to become appropriate early next year because they have seen that conditions in the labor market are not close to meeting the commission’s ‘extra significant progress’ criterion or because of uncertainty about the degree of progress towards the goal of price stability,” according to the minutes.
The Fed also voted to keep interest rates near zero. The Open Market Committee is scheduled to meet from September 21 to 22.
Data shows Americans are heading to work, but the impact that a highly contagious delta type of coronavirus could have on everything from reopening schools to work restrictions this fall remains uncertain.
In a press release on Wednesday, the Fed reiterated that much of the United States’ continued progress will depend on whether it can continue to vaccinate people.
“The trajectory of the economy still depends on the trajectory of the virus,” the Federal Open Market Committee said in a statement on Wednesday. “Advances in vaccines are likely to continue to limit the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
Only 50 percent of the adult population in the United States is fully vaccinated, according to the most recent report from the Centers for Disease Control and Prevention (CDC), with nearly 60 percent receiving only the first vaccine from a two-vaccine regimen. The number of vaccinations administered by August 12 was up one percentage point from the previous week.
But COVID-19 cases, hospitalizations and deaths have increased at a much faster pace. Centers for Disease Control and Prevention data shows daily new cases increased by 18.4 percent for the week ending August 13, while the number of hospitalizations increased by 29.6 percent and deaths increased by 21 percent.
While the recent surge in cases has led some states to re-impose mask mandates and some companies announce that they will not require employees to return to the office as planned in September, it remains to be seen whether states and cities will re-impose capacity restrictions on restaurants, bars and event venues. , which could lead to layoffs of service industry workers again.