Weekly Initial Claims Ticked Lower and Remain Below the Pre-Pandemic Level

Initial claims for regular state unemployment insurance fell slightly, decreasing 5,000 for the week ending April 23, coming in at 185,000 (see first chart). Claims continue to bounce around week to week but have posted declines in ten of the last fourteen weeks. Despite the volatility, claims remained below the January – February 2020 average of 212,000 prior to the lockdowns for the twelfth consecutive week. By long-term historical comparison, initial claims remain extremely low.

The four-week average rose for a third consecutive week, coming in at 179,750, up 2,250 from the prior week and is just the fourth increase in the last 12 weeks. Weekly initial claims data continue to suggest the labor market remains very tight. However, disruptions to the global economy due to the Russian invasion of Ukraine and the start of a Fed tightening cycle may cause volatility to economic activity in coming months.

The number of ongoing claims for state unemployment programs totaled 1.464 million for the week ending April 9, a drop of 102,848 from the prior week (see second chart). State continuing claims have declined in 11 of the past 13 weeks and have been below their pre-pandemic level of 2.111 million since October 2021 (see second chart).

The latest results for the combined Federal and state programs put the total number of people claiming benefits in all unemployment programs at 1.516 million for the week ended April 9, a decrease of 106,192 from the prior week. The latest result is the ninth week in a row below 2 million.

Despite some volatility, initial claims remain at an extremely low level by historical comparison. The overall low level of claims combined with the high number of open jobs suggest the labor market remains very tight. The tight labor market remains one of the strongest parts of the economy, providing support for consumer attitudes and consumer spending.

However, continuing labor shortages, along with materials shortages and logistical issues, are likely to continue to slow the recovery in production across the economy and sustain upward pressure on prices. In addition, geopolitical and global economic turmoil as a result of the Russian invasion of Ukraine have had a dramatic impact on capital and commodity markets, launching a new wave of disruptions to businesses. Furthermore, the start of a new Fed tightening cycle will likely weigh on future economic activity. The outlook remains highly uncertain.

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