The numbers: Coronavirus cases are falling fast and so are the number of people losing jobs. New applications for regular unemployment benefits fell below 400,000 in late May for the first time during the coronavirus pandemic.
Initial jobless claims dropped by 20,000 to 385,000 in the week ended May 29, the government said Thursday. It was the fifth decline in a row.
Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would slip to a seasonally adjusted 393,000.
The number of people applying for benefits has fallen by more than half since January to coincide with a surge in vaccinations and a steep decline in coronavirus cases.
New unemployment claims are still almost twice as high as they were before the pandemic, however. New applications had been running in the low 200,000s before the viral outbreak in early 2020.
Big picture: The fading pandemic has allowed most businesses to fully reopen, giving another boost to a U.S. economic recovery that had been turbocharged by massive federal stimulus payments.
One of the biggest problems many companies face right now is filling a record number of open jobs to meet a surge in pentup demand as Americans get out and about again.
An acute labor shortage, in turn, has made firms very reluctant to let go of any workers.
Nearly half of the states plan to cut off a $300 federal unemployment stipend owing to complaints the emergency benefits are discouraging people from taking jobs. It won’t be known until late June or early July if reduced benefits induce more people to find work.
What they are saying: “Claims remain elevated by normal standards, but the downward trend has been relentless in recent months, and a return to the pre-Covid level, in the low 200,000s, over the summer seems a decent bet,” said chief economist Ian Shepherdson of Pantheon Macroeconomics.
Key details: New unemployment claims declined the most in Florida, Texas and Oregon.
A few states, notably Pennsylvania, Kentucky, Illinois and California, posted large increases.
Another 76,098 applications for jobless benefits were filed last week through a temporary federal relief program. These claims had peaked last year at well over 1 million a week but have now dwindled to a pandemic low.
The number of people already collecting state jobless benefits, meanwhile, rose by 169,000 to a seasonally adjusted 3.77 million in the week ended May 22. These are known as continuing claims.
Some 5.3 million people who have exhausted state compensation were also getting extra federal benefits. The federal program ends in September.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs totaled 15.4 million as of May 156. That’s down about 50% from a pandemic peak.
Fewer than 2 million people were getting benefits before the pandemic erupted.
Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting. Widespread fraud has also resulted in tens of billions of dollars in improper payments, a Labor Department review estimated.