Since the start of the Great Recession, the very idea of initial unemployment claims dropping below the 300,000 threshold seemed rather fanciful. But the latest data from the Labor Department now shows that it’s happened twice in three weeks.
The number of people who applied for unemployment benefits fell below 300,000 for the second time in three weeks, solidifying a picture of an improving U.S. labor market in which layoffs remain low and companies are hiring at the fastest pace in years. Initial jobless claims fell by 14,000 to 289,000 in the week of July 27 to Aug. 2, the Labor Department said Thursday. Economists surveyed by MarketWatch expected claims to total a seasonally adjusted 305,000. The average of new claims over the past four weeks, meanwhile, dropped by 4,000 to 293,500, reaching the lowest level since February 2006.
February 2006, of course, was more than eight years ago – a point that easily predates the start of the Great Recession in late 2007.
That said, to reiterate the point I make every Thursday morning, it’s worth remembering that week-to-week results can vary widely, and it’s best not to read too much significance into any one report.
In terms of metrics, when jobless claims fall below the 400,000 threshold, it’s considered evidence of an improving jobs landscape, and when the number drops below 370,000, it suggests jobs are being created rather quickly. At this point, we’ve been below 330,000 in 19 of the last 22 weeks.
Above you’ll find the chart showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I’ve added an arrow to show the point at which President Obama’s Recovery Act began spending money.