The week before President Joe Biden’s inauguration, weekly unemployment claims were still a painfully high 886,000. As CNBC’s report yesterday made clear, we’ve come a long way since then.
New applications for U.S. jobless benefits dropped to a 52-1/2-year low last week, while the number of Americans on unemployment rolls continued to shrink, pointing to rapidly diminishing labor market slack that will keep wage inflation rising. Initial claims for state unemployment benefits fell 28,000 to a seasonally adjusted 187,000 for the week ended March 19, the lowest level since September 1969, the Labor Department said on Thursday.
Note, the same data showed continuing claims — folks who received jobless aid after an initial week — also fell to their lowest level since January 1970.
At face value, the significance of some of these numbers may seem elusive — in fact, 187,000 initial claims might even strike some as a large total — so let’s revisit our coverage from December to help add some context.
It was exactly two years ago this week 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 in August 2020, it was a step in the right direction. When they fell below 800,000 in February 2021, 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 2020, jobless claims finally dipped below 300,000 — putting us within shouting distance of the levels seen before the Covid crisis began in earnest — and now we’re below 200,000, 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 returned to the pre-pandemic average, we’ve also improved on it. This data comes on the heels of the latest jobs report, which showed the unemployment rate back below 4 percent and the economy having already created 1.16 million jobs so far in 2022.
The economy still needs work, and inflation remains an obvious problem, but breakthroughs like these are still worth celebrating.
Postscript: Some friends asked me a while back about the difference between the weekly unemployment claims data 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 reason: The more Americans are laid off, the worse it appears for the economy. The inverse is also true: As layoff totals improve, as they are now, it’s evidence of a healthier 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 the 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.