CHICAGO (NewsNation Now) — The number of Americans applying for unemployment benefits last week dropped to 684,000, the lowest weekly total since the coronavirus pandemic took shape roughly a year ago.
The U.S. Labor Department released its latest figures Thursday, showing that claims fell by 97,000 from 781,000 the week before. It’s the first time that weekly applications for jobless aid have fallen below 700,000 since mid-March of last year. Before the pandemic tore through the economy, applications had never topped that level.
Still, a total of 18.9 million people are continuing to collect jobless benefits, up from 18.2 million in the previous week. Roughly one-third of those recipients are in extended federal aid programs, which means they’ve been unemployed for at least six months.
But the drop in weekly claims signals a potential rebound in economic activity after weather-related disruptions in February.
Claims shot up in the second week of March, likely due in part to processing backlogs after severe winter storms in Texas and other parts of the densely populated South region.
The deep freeze in the second half of February, which also gripped other parts of the country, depressed retail sales, homebuilding, production at factories, orders and shipments of manufactured goods.
Warmer weather, the White House’s $1.9 trillion COVID-19 pandemic relief package and increased vaccinations are expected to boost activity in March. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell struck an optimistic note on the economy at an appearance before lawmakers this week.
“It is going to be a very, very strong year in the most likely case,” Powell said in response to a senator’s question on the economic outlook.
Meanwhile, other signs hint that the economy is emerging from the pandemic crisis with renewed vigor. Spending appears to be picking up, manufacturing is strengthening and employers are adding workers. Hiring increased in February, with 379,000 added jobs – more than double January’s total.
Credit card data from JPMorgan Chase showed that consumer spending jumped last week as the $1,400 checks that are going to most adults under Biden’s emergency aid package began to be paid out. The Treasury says it has so far distributed 127 million payments worth $325 billion.
Some analysts are increasingly optimistic that hiring will accelerate quickly this year. Two senior fellows at the Brookings Institution have forecast that employers will add a substantial 700,000 to 1 million jobs per month, on average, over the next 10 months. At the higher end of that estimate, the economy by year’s end would have regained all the 9.5 million jobs that remain lost to the pandemic.
There are still risks that could frustrate such hopes. The number of new daily coronavirus infections has leveled off, though hospitalizations and deaths continue to fall. And as many states have dropped or relaxed pandemic-related restrictions on gatherings and business activity, another wave of infections could weigh on the economy.
Though growth may accelerate this year, hiring often lags behind economic growth as businesses wait to see if rising demand is sustainable. What’s more, roughly 4 million Americans stopped looking for work during the pandemic and aren’t counted in the unemployment rate. Most of them will need to be re-hired for the economic recovery to be fully complete.
The Associated Press and Reuters contributed to this report. Reporting by AP Economics Writer Christopher Rugaber and Reuters’ Lucia Mutikani.