- US Labor Department reports a third consecutive decline in unemployment benefits claim.
- The current number is still higher than the previous figures recorded since 1967.
- The job market is expected to pick up after the cold weather when more vaccines will be available.
The positive report of the US Labour Department on declining unemployment benefit claims, a key gauge of job layoffs, has rekindled hopes of a faster economic recovery.
The number of people applying for federal unemployment benefits has fallen to 779,000 last week. The jobless figure had surged to a record high during the peak of the pandemic last year.
The last week’s figure was a third consecutive weekly decline in the unemployment numbers. It had reached a record high of 927,000 in the week of January 9. The current figure, however, is still higher than the numbers recorded in the past recessions since 1967, the Department said.
Economists believe the job market would gradually improve after the winter months when more vaccines would be available. and weather would also improve.
The cold weather and a sudden rush of new Covid cases in January had further slowed down the job market as concerns grew over likely new restrictions for offices and public gatherings.
Businesses, especially in the services, leisure, and hospitality sectors, have been the worst affected. However, the manufacturing sector manages to keep some momentum going during the crisis.
The news of another wave of the outbreak in the winter months has resulted in further job cuts, which washed away all the gains acquired in the previous seven months.
The Biden administration’s new economic recovery plan, however, has injected some enthusiasm in the markets amid the dark clouds of COVID-19.
The funding, amounting to USD 1.9 trillion, currently under consideration of the Congress, is expected to give US households and businesses some financial relief. It is expected to create new jobs, boost vaccine production, and reduce the larger economic stress seen currently.
Economists estimate some 50,000 people may have joined the workforce in January after gleaning the Labor data. The jobless rate is expected to hold steady at 6.7 percent, which had fallen to 3.5 percent last year. However, there have been also concerns of rising inflation because of huge amounts of dollars funds being poured into the markets to jumpstart the economy.
Besides President Biden’s USD 1.9 trillion spending program, his predecessor Trump had also cleared a USD 900 billion economic relief package last December.
However, some opposition members believe that the new administration’s decision to stop the US-Canada Keystone project runs contrary to what it promised for the economy. They believe the cancellation will hurt the economy since it had the potential to create many more jobs in the US.
Besides, they also criticize the government’s plan to hike the minimum wage, which they believe would prevent the potential recruiters from hiring more people in their companies. The Biden administration plans to increase the minimum hourly pay to at least USD 15.
But irrespective of these misgivings, controlling the virus remains the primary task of the new administration. President Biden has said that any delay in tackling the pandemic will have a devastating impact on the economy for months to come.