The number of people initiating claims for unemployment insurance dropped to a three-month low last week, providing a small ray of sunshine for an economy stuck in a deep freeze this winter.
In the week ending Feb. 20, initial unemployment claims fell 110,000 to 730,000, the fewest since Nov. 28 and the third lowest total for any week since the onset of the COVID-19 pandemic in March, data released by the Department of Labor Thursday showed. The median expectation of economists was 826,730, according to Moody’s Analytics.
At 807,000, the 4-week moving average is now at its lowest since Dec. 5. Any celebration should be muted, though, as weekly claims are still about three times higher than they were before the pandemic, and it’s too soon to tell if this is merely a one-week improvement or a signal that better days have arrived, economists said. Initial claims are often volatile, and extreme weather, like the storms that led to widespread power outages in the South last week, make them even less predictable, they said.
Still, the economy has shown some signs of thawing, with a stimulus-powered jump in retail sales in January and business activity growing at the fastest pace in six years. President Joe Biden has proposed a $1.9 trillion stimulus package that would inject more money into the economy.
“While the prospect of a larger relief package and a more expedient end to the pandemic has moved up our expectation of the recovery of the labor market, there is still a long road ahead,” Moody’s senior economist Dante DeAntonio wrote in a commentary.