The week before President Joe Biden’s inauguration, weekly unemployment claims were still a painfully high 886,000. As CNBC’s report this morning made clear, we’ve come a long way since then.
The labor market tightened further last week, with initial jobless claims falling to their lowest level in more than 53 years, the Labor Department reported Thursday. Initial filings for unemployment dropped to 166,000, well below the Dow Jones estimate of 200,000 and 5,000 under the previous week’s total, which was revised sharply lower.
The last time jobless claims were this low: November 1968 — months before the moon landing.
And since the U.S. population 54 years ago was about 200 million — as opposed to 330 million now — today’s data is even more impressive.
At face value, the significance of some of these numbers may seem elusive — in fact, 166,000 initial claims might even strike some as a large total — so let’s revisit our recent coverage to help add some context.
It was in March 2020 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 2021, 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 — by a wide margin. This data comes on the heels of the latest jobs report, which showed the unemployment rate improving to 3.6 percent and the economy having already created 1.69 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 during 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.
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