Despite a dip in initial jobless claim applications last week and a positive initial read on fourth-quarter growth, the U.S. economy continues to struggle under the weight of the ongoing pandemic.
The Labor Department reported Thursday that 847,000 Americans filed for first-time jobless benefits in the week ended Jan. 23 vs. an upwardly revised 914,000 claims the week before. Economists polled by FactSet had expected claims of 888,000.
Separately, the Commerce Department reported Thursday that economic growth in the fourth quarter came in at an initial 4%. Economists polled by FactSet had been expecting growth of 4.2% after a skewed third-quarter reading of 33.4%.
For 2020 as a whole, the U.S. economy declined by 3.5% - its worst showing since 1946.
Even with the slightly better-than-forecast numbers, economists, market-watchers and most notably the Federal Reserve still see anemic growth ahead.
“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the central bank said in a statement following its first meeting of 2021 on Wednesday, where it left its benchmark fed funds rate at near zero and committed to maintaining its bond-buying program at $120 billion a month until it sees “substantial further progress” in employment and on inflation.
"The economy is a long way from our employment and inflation goals," Fed Chairman Jerome Powell said at the accompanying news conference on Wednesday, "and it is likely to take some time for substantial further progress to be achieved."