The recently published data for February’s employment data sheds new light on the state of the American economy. Outwardly, unemployment is looking better than ever; the number of people receiving benefits fell to 1.419 million people, the lowest since 1970. However, pry a little bit deeper and millions of people who have been classed as having ‘left the workforce’ are not counted in official data. The high inflation also shows no sign of stopping, despite moves by the Federal Reserve to counter.
But some positive data is that of initial unemployment claims. This can be used as a fairer reflection of unemployment in the US compared to raw numbers as it shows those who have only just started claiming benefits; it gives an immediate reflection on the state of the US economy. The first quarter of 2022 is not yet over, but data is released weekly to be analysed.
On the week beginning January 2, weekly initial claims were at 207,000, the lowest value since before the pandemic. However, the emergence of the Omicron variant of covid-19 slammed on the economic brakes as the number of claims reached nearly 300,000 just two weeks later.
The number of cases peaked, and then dropped quickly, as did the initial claims. Despite two up-ticks in mid-February and the start of March, the number of initial claims continues to be on a positive trend, but not yet at pre-pandemic levels. These hovered around 150,000 new claims a week.
Despite countless challenges, an economic meltdown has been turned around to historic lows on initial unemployment claims, and the lowest number of people needing unemployment benefits since 1970. pic.twitter.com/LAaGxXPEV8
— Jesse Lee (@JesseLee46) March 18, 2022
All of these figures are plenty down on the records set during the pandemic, where 6.149 million initial claims were seen in early April 2020. Initial claims remained over a million a week until August 2020, and have since seen a slow decrease in claims, reaching the figure we have for March 22, 2022 of 214,000 initial claims.
What about other aspects of the economic outlook?
Considering the number of unemployment claims, there remain a swathe of jobs that are available. There were 11.3 million job openings at the end of January, up from 10 million from three months prior. Clearly, workers are not happy with terms being offered, and job priorities have changed since the start of the pandemic some two years ago.
Inflation remains high, at just over 7.5 percent, In a bid to tackle this, the federal reserve announced its first interest rate rise in three years by 0.25 percent.
In a press conference after the meeting announcing the change, Jay Powell, Fed chair, said the committee had raised rates “against the backdrop of an extremely tight labour market in high inflation” and that it “anticipates that ongoing increases in the target range for the federal funds rate will be appropriate”.