Article reflection #3

Jobless Claims Fall Sharply to 684,000, 4Q GDP Revised Upward The positive reports suggest the economy is poised for takeoff.

By Tim Smart March 25, 2021

Signs displayed in front of a store, March 5, 2021, in Miami.(JOE RAE DLE /GETTY IM AGES)

The number of Americans filing first-time unemployment claims fell by 97,000 last week to 684,000, the Labor Department reported Thursday.

Separately, the Bureau of Economic Analysis reported on Thursday that gross domestic product rose at an annual rate of 4.3% in the fourth quarter, up from the previous previous estimate of 4.1%.

The weekly claims number is welcome news from the prior week's revised level of 781,000. The four-week moving average, meanwhile, fell 13,000 from the previous week's revised average of 749,000.

The figure was better than expected and may signal the trend is finally dipping below the key 700,000 weekly threshold.

"For the first time since the pandemic began, new claims for jobless benefits have dropped below the 700,000 level," said Bankrate.com senior economic analyst Mark Hamrick. "This is likely a sign of even better things to come for the nation’s battered economy and the millions of individuals who are jobless, underemployed or have left the workforce but would like to work."

Reports on the health of the job market have varied recently, with February's monthly gain of 379,000 jobs followed by an unexpected jump in unemployment claims for the period ending March 13.

Most economists expect the employment situation to improve as the year progresses with more people receiving the coronavirus vaccine and more states and cities lifting restrictions on gatherings and dining out.

More than a quarter of the population has now received at least one dose of the vaccine, with about 14% having had two shots, according to the CDC. But there is a fear that people are being reckless as establishments reopen, a concern that led to officials in Miami Beach applying a curfew on spring break visitors.

Nonetheless, the economy continues to show signs of improvement and Treasury Secretary Janet Yellen told Congress earlier this week that "I think we may see a return to full employment next year."

Nela Richardson, chief economist for private payroll firm ADP, says that the labor market showed resilience in May and June following the record 14.8% unemployment rate logged in April. Employers added 7.5 million jobs in May and June but since then the pace has slowed considerably. Roughly 10 million Americans are still without jobs.

"We need to see a much stronger momentum," Richardson says. And, referring to the hard- hit leisure and hospitality sectors, she adds, "We are still waiting for those industries to come back."

The GDP number follows a 38.3% rise in the third quarter as the economy snapped back from the depths of the coronavirus pandemic and national lockdowns in the second quarter.

Both reports come on the one-year anniversary of passage of the CARES Act, the first of three coronavirus relief packages passed by Congress, the latest of which is now sending $1,400 checks to Americans. All told, about $5 trillion in fiscal stimulus has been added to the U.S. economy in the past 12 months as well as additional monetary policy support from the Federal Reserve.