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Jobless Claims Fall Below 1 Million - a Sign of Recovery?

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Less than 1 million Americans filed for first-time unemployment benefits last month.

While that's a great sentence to read in light of the coronavirus pandemic which has obliterated multiple millions of U.S. jobs over the past five months, it is still a far cry from pre-pandemic normalcy, in which first-time jobless benefits claims used to register in the thousands, not millions.

Indeed, the Labor Department reported Thursday that 963,000 Americans filed for first-time jobless benefits in the week ended Aug. 8, down from a revised 1.186 million claims the week earlier. Economists polled by FactSet had been expecting claims of 1.15 million.

Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 15.486 million for the week ended Aug. 1, down from a revised 16.09 million the week before. The continuing claims numbers are reported with a one-week lag, but are considered a better gauge of the labor market. 

While trending slightly lower in recent weeks, the numbers continue to reflect companies’ ongoing struggles to remain open, productive and in need of workers, particularly with the coronavirus’s resurgence in many regions across the country.

They also point to what economists and more recently Federal Reserve officials anticipate concerning the rebound in growth since March: that it is temporary, and additional flare-ups of Covid-19 potentially exacerbated by back-to-school and other plans next month could mean a second dip in economic activity, and in turn an increase in jobless benefit claims.

"It’s promising that initial unemployment claims (non-seasonally adjusted) have fallen, but there’s still a long road ahead," said Indeed Hiring Lab Economist AnnElizabeth Konkel. "The sheer magnitude of the claims five months into the crisis underscores how much coronavirus has battered the economy."

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