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U.S. jobless claims fall sharply to 310,000, a new low since COVID-19 pandemic began

The numbers: Initial jobless claims fell by 35,000 to 310,000 in the week ending Sept. 4, the Labor Department said Thursday.  That’s the fewest claims since the pandemic struck in March 2020. The decline in the latest week was the largest since late June.

Economists polled by The Wall Street Journal had estimated new claims would total 335,000.

Before the pandemic, initial jobless claims averaged about 220,000 a week.

Big picture: Claims have fallen fairly steadily since hitting 424,000 in mid-July. Despite some slowing of activity, layoffs are still limited. Economists say this is a sign businesses remain confident about the future.

This is the last full week in which people are eligible for special pandemic-related assistance.

Scott Anderson, chief economist at Bank of the West, estimates that about 7.5 million people, including gig workers, lost jobless benefits when the programs ended Monday, while an additional 3 million people will see their regular unemployment checks cut cut by $300 a week.

Economists will be watching closely to see if this eases some of the worker shortages seen in the job data.

There could be a rise in claims in coming weeks as a result of the massive flooding from Hurricane Ida.

Key details: New claims fell the most in Missouri, Florida and New York. The biggest increases took place in Louisiana, California and Michigan, 

Meanwhile, the number of people already collecting state jobless benefits slid by 22,000 to a seasonally adjusted 2.78 million in the week ended Aug. 28. These so-called continuing claims are also at a pandemic era low.

Altogether, some 11.9 million people were reportedly receiving benefits through eight separate state or federal programs as of Aug. 21, down from 12.2 million in the prior week. 

At the height of the pandemic total claims topped 30 million. They averaged less than 2 million a week before the viral outbreak.

What are they saying? “The biggest question mark is what happens to the labor market, and consumer spending, given the pandemic-related unemployment insurance programs expired on Sept. 6. Many states have been ending their programs over the past few months, with little apparent impact on job-seeking behavior or consumer spending. But the national expiration could have broader effects,” said Gus Faucher, senior economist of The PNC Financial Services Group.

Market reaction: Stocks
SPX,
-0.25%

DJIA,
-0.31%

opened higher on Thursday as investors welcomed the drop in claims.

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