The number of new applications for unemployment benefits fell by 17,000 last week to 232,000, an extremely low rate that suggests that employers are increasingly determined to avoid letting workers go.
Weekly jobless claims are seen as a proxy for layoffs and have been watched closely in recent weeks for indications about how COVID-19 affected the labor market. This week’s decline continues a generally downward trend in jobless claim reports since the omicron variant peaked in mid-January and comes after a surprisingly good January jobs report.
The news that layoffs are increasingly rare will buoy President Joe Biden as voters increasingly sour on his management of the economy and will also encourage the Federal Reserve to accelerate its campaign to raise interest rates in hopes of curbing inflation.
“We expect initial claims to continue to grind back toward 200k as the impact of the Omicron variant of the coronavirus fades. Layoffs are expected to be minimal in a tight labor market where employers continue to struggle to attract workers,” said economists for Oxford Economics after the report.
Jobless claims have been in a steady decline over the last year. Around this time in February 2021, new claims were averaging more than 800,000 per week. Even during the worst of the omicron uptick, which saw the most nationwide cases by far, jobless claims only ticked up slightly, showing resiliency in the U.S. recovery.
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In recent weeks some cities and states have been lifting mask and vaccination mandates as a sense of normalcy returns. More businesses are also calling employees back into the office after months of remote work.
In other good news, the economy far outpaced expectations in January and added 467,000 jobs, much more than the consensus prediction of 150,000.
While the job side of the economy has been improving, one point of economic malaise is the current inflation situation. Consumer prices grew 7.5% in the year ending in January, the hottest pace in decades.
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In order to combat the higher prices, the Fed is gearing up to hike interest rates for the first time in years. The rate hikes are expected to be more aggressive than thought just weeks ago, given the burgeoning inflation.
