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.
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 percent annual rate in the final three months of last year, the government estimated Thursday, slightly faster than its previous estimate. That pace is widely 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 so far distributed 127 million payments worth $325 billion.
Last week, Federal Reserve policymakers substantially boosted their forecast for the economy this year, anticipating growth of 6.5 percent for 2021, up from an estimate of just 4.2 percent three months ago. That would be the fastest rate of expansion in any year since 1984. The Fed also projects that the unemployment rate will reach 4.5 percent by the end of this year, down from the current 6.2 percent.
Last week, some individual states reported sharp drops in applications for aid. In Illinois, they tumbled 80 percent to just under 15,000. In Ohio, they fell by nearly a third to 69,000.
Nationally, though, the number of recipients in an extended federal jobless benefits program jumped by 730,000 to 5.5 million, with nearly all the increase occurring in California.