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Sharp Drop in Initial Claims Boosts Economic Outlook

Initial claims for regular state unemployment insurance totaled 576,000 for the week ending April 10, a drop of 193,000 from the previous week’s upwardly revised tally of 769,000 (see first chart). Despite two consecutive upticks in prior weeks, the sharp drop in the latest week puts the current result at the lowest level since March 14, 2020. The strong performance suggests the outlook for jobs and the economy continues to improve.

The four-week average fell 47,250 to 683,000, the first week below 700,000 since March 14, 2020. Continuing claims are likely to continue trending lower as the combination of vaccine distribution and easing government restrictions on consumers and businesses slowly push the economy closer to normal operation. However, significant damage has been done by the lockdowns and full recovery is likely some time away.

The number of ongoing claims for state unemployment programs totaled 3.997 million for the week ending March 27, down 73,855 from the prior week, the first reading below 4 million and the lowest since the lockdowns began in March 2020 (see second chart).

Continuing claims in all federal programs totaled 12.937 million for the week ending March 27, a drop of 1.162 million (see second chart). Since the beginning of June 2020, continuing claims in all Federal programs have been in the 12 to 16 million range, averaging 14.055 million.

The total number of people claiming benefits in all unemployment programs including all emergency programs was 16.934 million for the week ended March 27, down 1.236 million from the prior week. Total claims have been in the 16 to 20 million range since November (see second chart).

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