Together, the two major economic reports released by the federal government Thursday — the Department of Commerce’s revised estimate of first-quarter gross domestic product growth and the Department of Labor’s weekly tally of the number of Americans applying for unemployment benefits – serve as important barometer of the progress the United States has made toward recovery. Intrinsically, GDP data is of far greater magnitude than initial jobless claims numbers, but the two reports still complement each other well; United States GDP tells the larger story of why businesses have generally been hesitant to expand payrolls, even if layoffs have returned to pre-recession levels. In turn, jobless claims — which serve as a proxy for layoffs — highlight that emerging unemployment is returning to acceptable levels.
Earlier this month, Americans filed the fewest number of first time applications for unemployment benefits in seven years, meaning the last time jobless claims — and by association, emerging unemployment — fell so low before the financial crisis and subsequent recession. To any casual observer of the United States labor market, hitting such a historic milepost would suggest recovery of the economy and the jobs market is well on its way to completion. It is true that the strides forward the labor market has taken, especially in the past 12 months, cannot be discounted. Yet, as the most recent figures released by the Department of Labor prove, progress is steady but not without setbacks. Or as Pierpont Securities economist Stephen Stanley told Bloomberg, “the labor market is showing slight progress, but nothing dramatic.”
Despite a substantial uptick last week, jobless claims have continued to trend down and dropped by by 27,000 in the week ended May 27. The Labor Department reported that 300,000 Americans filed initial applications for unemployment benefits, well below the 318,000 expected by analysts. At this level, claims numbers are well in line with pre-recession levels, when the average churn of the job market created approximately 300,000 weekly applications for unemployment benefits.