Today, we close out the week with a double shot of good news.
Initial claims for unemployment fell to 684,000 last week, down from 781,000 the prior week and below the 735,000 Dow Jones estimate.
More importantly, this was the lowest figure posted since the COVID-19 pandemic began in mid-March. Here is a chart of weekly claims, so you can appreciate the improvement over the past year. The 684,000 claims are also below the pre-pandemic record of 695,000 set during the week ending October 2, 1982.
Hold on, don’t you always warn us the weekly data is volatile and should be viewed with caution?
Correct, but here is some hard data to back up my enthusiasm:
- The four-week moving average of jobless claims, which helps to smooth out weekly data, also fell to a pandemic-era low of 736,000.
- As of Wednesday, over 130 million vaccinations had been administered in the U.S., with 14% of Americans now fully vaccinated. This will enable more businesses to reopen and hire workers.
- 127 million Americans have already received the latest round of stimulus checks, which will help boost consumer spending in the coming weeks.
- The Fed remains committed to keeping rates low until at least 2024.
While this is just one week of data, I expect claims to continue to decline as the economy is firing on all cylinders right now. You will always see outliers in weekly data, but the labor market has too much going for it right now to expect claims to start rising again.
The Bureau of Economic Analysis reported yesterday that Gross Domestic Product grew at a 4.3% rate in 2020’s fourth quarter, up from their prior estimate of 4.1%. GDP remains 2.4% below its pre-pandemic level.
While this may not be the biggest news, it’s still worth noting that the more information we receive on the economy, the better it looks. Remember that the surge in virus cases at the end of 2020 had many predicting a dramatic slowdown in GDP growth into the first quarter of 2021.
So, enjoy this bit of information, and the fact that the Atlanta Fed’s latest estimate of first-quarter 2021 is 5.4%. They will be updating that figure later today—let’s hope upwards.