Jobless Claims Drop Much More Than Expected

WASHINGTON, DC - FEBRUARY 16: U.S. President Joe Biden speaks briefly to reporters on his way to Marine One on the South Lawn of the White House on February 16, 2021 in Washington, DC. President Biden is traveling to Milwaukee, Wisconsin for a town hall event to discuss the coronavirus …
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New claims for unemployment benefits dropped last week, the latest sign that the economy has strengthened more than expected as vaccination spread across the U.S.

The Department of Labor estimated that 730,000 people filed for unemployment benefits last week, a steep decline from the previous week’s 841,000.

Jobless claims can be volatile week to week. In particular, they may have been held back last week by the cold snap and snow across much of the country. To smooth out the volatility, economists look to the four-week average of claims.  These fell by 20,500 to 807,750 and the previous week was revised down by 5,000 from 833,250 to 828,250.

The faster than expected recovery of the labor market could have political fallout. Some lawmakers may see a decline in jobless claims—which are a proxy for layoffs—as a reason to cut back on the covid relief spending plans of the Biden administration.

The total number of continued weeks claimed for benefits in all programs for the week ending February 6 was 19,042,686, an increase from the prior week.

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