Here's why you shouldn't panic about the latest jobs report
Unemployment claims are up, but Pandemic Unemployment Assistance claims are down, indicating the economy is still on the upswing.
The Labor Department released its weekly job report on Thursday, showing that new unemployment claims rose unexpectedly last week.
Experts say it’s not necessarily cause for alarm, and that the state of the economy is still looking up.
The report notes that jobless claims shot up to 744,000 for the week ending April 3, about 16,000 higher than the previous week when accounting for seasonal adjustments. Weekly claims averaged only about 220,000 pre-pandemic.
However, when it comes to specific pandemic-related job losses, findings indicate that recovery is still rolling along. According to the report, Pandemic Unemployment Assistance claims decreased sharply by 85,000 between the week ending March 27 and the week ending April 3 — from 237,065 to 151,752.
Continuing unemployment claims have also dropped to 3.73 million, which economists say is the lowest they’ve fallen at any point during the pandemic.
Experts claim the economy is still on a steady upswing and this week’s labor report is not an indicator that it’s tanking. Unemployment numbers are still drastically lower than they were at the same time last year, when 6.6 million Americans applied for unemployment benefits in the first week of April alone.
And according to economists, spikes in general unemployment claims are largely due to increases in two states, New York and California. Backlogs in processing unemployment assistance applications, as well as increases in COVID cases, could in part account for the increases in those places.
Thomas Simons, an economist for the Jefferies Group, an investment banking company, told MarketWatch, “Once again, there are large swings in a small handful of states that go against the movements in the vast majority of other states.”
Experts say the economy’s growth in other sectors is encouraging. In February, jobs were opening up at the highest pace ever recorded, and the unemployment rate has dropped from 6.2% to 6%. Some 916,000 jobs were added by employers in March, a sharp uptick after a hiring lull since last summer, and experts are predicting a coming unemployment boom over the summer.
Moreover, the International Monetary Fund has projected that the U.S. economy will grow a full 6.4% in 2021.
One economist for Indeed Hiring Lab, AnnElizabeth Konkel, told the New York Times that while the rise in unemployment claims might seem troubling, it’s reassuring that pandemic-related assistance claims are dropping.
“It’s still movement in the right direction,” she said.
Rubeela Farooqi, a top U.S. economist at High Frequency Economics, told the outlet that the increase in claims was disappointing, but added, “Our expectation remains that as large sections of the economy come back online, recovery in the labor market will be ongoing.”
Bankrate.com’s senior economic analyst, Mark Hamrick, told the Wall Street Journal that the economy is still trending in the right direction despite the uptick in unemployment claims.
“As we get closer to herd immunity, as restrictions can be lifted — think about dining rooms that can go from 50% to 100% capacity and baseball stadiums that can be 100% instead of 10% — those are things that get us closer to where we were before,” he said.
Oxford Economics lead economist Nancy Vanden Houton told CNN that a brief spike in jobless claims isn’t alarming.
“Jobless claims may bounce around week to week as the recovery takes hold,” she said, “but we expect they will start to decline more consistently as the economy gains momentum.”
Published with permission of The American Independent Foundation.
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