Jobless claims increase amid lackluster recovery



Defying economists’ expectations, nearly 300,000 Americans filed for unemployment this past week, as the economy continued to drag its feet.

Findings reported by the Department of Labor early Thursday morning show an increase in initial jobless claims for the third straight week. The Department reported a surprising 286,000 jobless claims for the week of Jan. 15. The sharp rise in unemployment indicates that 55,000 more claims were processed compared to the previous week, which had 231,000. Economists originally projected the week of Jan. 15 to have 250,000 claims. This data shows the largest increase in unemployment since mid-October and suggests an even slower recovery from COVID than initially suggested. Furthermore, the increasing spread of the Omicron variant has not made economic recovery any easier.

This wintertime increase in unemployment continues the recent trend of lackluster job growth. Last December, the American economy added 199,000 jobs despite economists projecting the addition of 422,000 non-farm jobs.

According to the Wall Street Journal, the continuing spread of COVID-19’s variants throughout the country has slowed job growth for an extended period despite a seemingly perpetual glut of job openings. There are roughly 60% more job openings than before the pandemic, yet joblessness continues to increase. Americans are even quitting their jobs in record numbers.

In addition, this past December saw the greatest increase in inflation since 1982. Despite claims made by White House leadership, everyday expenses continue to increase, and the private sector struggles to return to its pre-COVID operational capacity. In 2021, wages grew by 4.7% and unemployment dropped to 3.9%, while inflation hit 7% as of December.

However, there is reason to be optimistic. If Omicron is, in fact, the last major wave of COVID-19, then the economy could potentially recover around springtime.

David Kelly, chief global strategist for JPMorgan Funds, speculated that life could return to normal by March and that the “second quarter should see a solid rebound in economic activity.” Kelly warned that if COVID continues to linger beyond the Omicron variant, economic suppression could continue throughout the rest of the year.

Despite the Omicron variant being characterized by its mildness, it continues to spread throughout the United States and has inspired some parts of the country to renew intense COVID restrictions. Several major cities instituted vaccine mandates in an attempt to prevent the further spread of COVID. These mandates — colloquially referred to as “vaccine passports” — prohibit unvaccinated individuals from participating in society despite it being well documented that one’s vaccination status does not impede the Omicron variant from spreading.

These COVID restrictions will, no doubt, hinder economic recovery as they prevent thousands of Americans from participating in revenue-generating ventures, which in turn will negatively impact employment numbers.

Economic recovery is complicated: Weekly jobless claims falls to historic low as inflation keeps rising



New weekly jobless claims have fallen to the lowest level in more than half a century, according to numbers released by the Biden administration Wednesday. At the same time, prices rose at the fastest rate since the early 1990s, as inflation continues to spike.

The Department of Labor reported that seasonally adjusted initial jobless claims fell by 71,000 last week to 199,000. This is the lowest number of initial claims since Nov. 15, 1969, when Richard Nixon was president.

The report marks a milestone for the labor market's recovery from the pandemic. Through 2019, there were an average 218,000 jobless claims each week. President Joe Biden celebrated the new numbers as a "historic jobs recovery" in a statement.

"More Americans are getting back to work and more Americans have money in their pockets, thanks to the American Rescue Plan and the vaccination campaign," Biden said.

Economists say the sharp drop in unemployment benefits claims is an encouraging sign, continuing several strong months of job growth and consumer spending as Americans look forward to the holiday shopping season.

"Claims have been moving in the right direction and are sending a positive signal about the labor market. Businesses are wary of letting go of workers amid a severe labor shortage," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, explained in an interview with the Wall Street Journal.

Daniel Zhao, a senior economist with Glassdoor, concurred that employers are holding on tightly to whatever workers they can find amid a nationwide labor shortage.

As you can see from the above chart, this is in part due to the seasonal adjustment expecting a much larger jump in non-seasonally adjusted claims, so this dip below pre-crisis levels may be short-lived.\n\n#joblessclaims 2/
— Daniel Zhao (@Daniel Zhao) 1637762799

"Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement," Mark Hamrick, chief economic analyst at Bankrate.com, said.

"The strains associated with higher prices, shortages of supplies and available job candidates are weighed against low levels of layoffs, wage gains and a falling unemployment rate," he told The Hill. "Growth will likely be above par for the foreseeable future, but within the context of historically high inflation which should relax its grip on the economy to some degree in the year ahead."

Last month's jobs report said employers added 531,000 jobs in October, the largest monthly gain in three months. The unemployment rate dropped to 4.6% from 4.8%, according to the Department of Labor, although the U.S. economy still has four million fewer jobs than in February 2020, before "two weeks to slow the spread."

But while joblessness appears to be falling, price increases are hitting all Americans directly in their pocketbooks.

According to the Commerce Department, prices for personal consumption expenditures excluding food and energy increased 4.1% from a year ago, CNBC News reports. Including food and energy, the PCE index rose 5%, the fastest rate since November 1990.

"Inflation continued to be reflected most in surging energy costs, which rose 30.2% from a year ago, while food prices increased 4.8% during the span," CNBC reported. "Services inflation gained 6.3%, the same as in September, while goods inflation jumped 7.3%, up from the 6.4% pace in the previous month."

Americans are noticing. A Yahoo News/YouGov survey published Wednesday found that 37% of Americans say inflation has impacted them "a great deal" and 40% say it has had "some" impact. Rising prices may be affecting Biden's job approval, as the same poll showed that only 43% of adults approved of the president's performance.

Biden acknowledged that rising inflation is complicating economic recovery in his statement. He called on Congress to pass the Build Back Better Act, asserting that his nearly $2 trillion spending proposal will "cut costs for American families without adding to price pressures."

"We have more work to do before our economy is back to normal, including addressing prices increases that hurt Americans' pocketbooks and undermine gains in wages and disposable income," Biden said.

"Today's data reinforce the historic economic progress we are making and the importance of building on that progress in the weeks ahead."

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