Weekly Jobless Claims Hit Five Decade Low in Stunning Decline Since 1969
On Wednesday, November 24, the Labor Department announced that the number of jobless claims has dropped to their lowest in five decades since 1969. The new filing for the last week totaled 199,000, a number not seen since November 15, 1969.
Well, the jobless data is lower by more than 20% from the Dow Jones estimates of 260,000 as well as the previous week’s jobless data numbers of 270,000. This stunning fall in a week’s time seems quite exemplary, however, the Labor Department didn’t indicate any specific factor that caused the fall.
The job market in the United States has been under pressure ever since the major shock from COVID-19 in March 2020. As per CNBC, the decline, in part, appears due to seasonal adjustments. On the other hand, the unadjusted claims totaled 258,622, resulting in a 7.6% jump from the previous week.
In some other reports coming on Wednesday morning, the second-quarter GDP growth has been revised up slightly to 2.1%, however, it has been well below the estimate of 2.2%. Similarly, the durable goods orders declined by 0.5% worst than the expectation of 0.2%.
Drop in the Jobless Claims for Unemployment Insurance
The total number of people receiving unemployment insurance benefits under all programs dropped sharply by 52,390 to 2.43 million. The data comes despite the rapidly surging inflation in the US that is running at its fastest pace in nearly 3 decades.
Disrupted supply chains and clogged ports have been major contributors to higher prices as manufacturers and service providers have been trying to meet the higher demand. Well, these improving numbers are likely to grab the attention of the lawmakers at the Federal Reserve who have kept the crisis-level policies in place despite the steady improvement in the jobs market.
The US central bank has already hinted that it will gradually start reducing its monthly bond purchases. As a result, stock market investors are getting ready for the Fed to increase the interest rates. The officials have indicated the possibility of one rate hike the next year in 2022. However, some market analysts believe that there’s a 60% probability that there will be three rate hikes in the next year.
Soon after the report, the government bond yields were higher, however, the stock market was ready for a negative reaction. The drop in the jobless claims is an indication that the economy has been growing faster than expected in the summer.
Further, citing data from the commerce department, CNBC reported that:
“GDP, a total of all goods and services produced, increased one-tenth of a percentage point from the initial estimate of 2%, mostly on the backs of upward revisions in consumer purchases and private inventory investment.”
The report also shows a major revision to the increase in wages and salaries. This grew by more than 301 billion registering an upward revision of more than 50%. The report also shows that the orders for the longer-lasting goods fell for the second consecutive month.