The week before President Joe Biden's inauguration, weekly unemployment claims were still a painfully high 886,000. CNBC reported this morning on the newest data from the Labor Department, which offers the best news on layoffs since before I was born.
Weekly jobless claims tumbled last week, reaching a fresh 52-year low as the U.S. jobs market climbs out of its pandemic-era hole, the Labor Department reported Thursday. Initial filings for unemployment insurance totaled 184,000 for the week ended Dec. 4, the lowest going back to Sept. 6, 1969, which saw 182,000.
If this sounds familiar, it's not your imagination. Two weeks ago, jobless claims also reached a 52-year low, but this new report shows the figure improving a little more.
As we discussed at the time, it was in March 2020 when jobless claims first spiked in response to the Covid-19 crisis, climbing to over 3 million. That weekly total soon after reached nearly 7 million as the economy cratered. For 55 consecutive weeks, the number of Americans filing for unemployment benefits was worse than at any time during the Great Recession.
Thankfully, all of that appears to be behind us.
Periodically over the course of the crisis, there have been understated threshold-based celebrations. When unemployment claims finally dipped below 1 million last August, it was a step in the right direction. When they fell below 800,000 in February, it offered similar evidence of slow, gradual progress. Fortunately, the pattern continued: Totals fell below 700,000 in March, below 600,000 in April, below 500,000 in early May, and below 400,000 in late May.
In early October, jobless claims finally dipped below 300,000 — putting us within shouting distance of the levels seen before the Covid-19 crisis began in earnest — and now we've dipped below 200,000 for the second time in three weeks, which hardly seemed possible in the recent past.
For nearly two years, the goal was to reach a number that resembled normalcy. In the early months of 2020, the U.S. average on unemployment claims was roughly 211,000, and many have wondered how long it would take to get back to such a total.
As of today, we've not only reached the pre-pandemic average, we've also improved on it. The economy still needs work, but a breakthrough like this is still worth celebrating.
Postscript: Some friends recently asked me about the difference between these numbers and the monthly job numbers, so let's quickly review.
Every Thursday morning, the Labor Department issues a report documenting first-time unemployment filings nationwide. This data, which is revised a week later, effectively summarizes the number of Americans who were laid off the week prior. It does not include people who voluntarily left the workforce through retirement or those who quit their jobs, and are therefore ineligible for jobless benefits.
It's an important weekly look at the employment landscape for an obvious: The more Americans are laid off, the worse it appears for the economy. The inverse is also true: As layoff totals drop, as they are now, it's evidence of a healthy economy.
The first Friday of every month, however, the Labor Department's Bureau of Labor Statistics releases a more comprehensive report. It doesn't count weekly layoffs; it counts the total number of jobs created from the previous month. The two numbers are related, but they don't always move together: Just because employers aren't firing workers doesn't necessarily mean that employers are hiring workers.
It's partly why this monthly report generates far more attention: It gives us a look into how many jobs are being created, whether wages are going up or down, what the overall unemployment rate is, etc.