US jobless claims shrink

Labor Department report signals recovery gaining momentum, experts say

The number of people seeking unemployment benefits fell sharply last week to 684,000, the fewest since the pandemic erupted a year ago.

WASHINGTON — The number of people seeking unemployment benefits fell sharply last week to 684,000, the fewest since the pandemic erupted a year ago and a sign that the economy is improving.

Thursday’s report from the Labor Department showed that jobless claims fell from 781,000 the week before. It is the first time that weekly applications for jobless aid have fallen below 700,000 since mid-March of last year. Before the pandemic tore through the economy, applications had never topped that level.

The number of people seeking benefits under a federal program for self-employed and contract workers also dropped, to 241,000, from 284,000 a week earlier. All told, the number of applicants fell below 1 million for the first time since the pandemic.

Economists are growing more optimistic that the pace of layoffs, which has been chronically high for a full year, is finally easing.

“While the level of claims remains elevated,” said Nancy Vanden Houten, an economist at Oxford Economics, “we expect they will continue to recede as the recovery gains momentum.”

Still, a total of 18.9 million people are continuing to collect jobless benefits, up from 18.2 million in the previous week. Roughly one-third of those recipients are in extended federal aid programs, which means they’ve been unemployed for at least six months.

Their prolonged joblessness could prove to be a long-term hindrance: Typically, many people who have been unemployed for extended periods struggle to find work even as the economy regains its health.

The economy has been showing signs of emerging from the pandemic crisis with renewed vigor, with spending picking up, manufacturing strengthening and employers adding workers. Hiring increased in February, with 379,000 added jobs — more than double January’s total. The economy expanded at a 4.3% annual rate in the final three months of last year, the government estimated Thursday, slightly faster than its previous estimate. That pace is expected to accelerate in the coming months, fueled by substantial government rescue aid.

Credit card data from JPMorgan Chase showed that consumer spending jumped last week as the $1,400 checks that are going to most adults under President Joe Biden’s $1.9 trillion emergency aid package began to be paid out. The Treasury says it has distributed 127 million payments worth $325 billion.

Across the country, economic activity slowed in February as severe winter weather caused sharp drops in home sales, retail spending and orders for heavy factory goods. Most economists, though, say they think the economy is now rebounding as the weather improves and additional support from the new $1.9 trillion federal rescue package kicks in.

Though growth may accelerate this year, hiring often lags behind economic growth as businesses wait to see if rising demand is sustainable.