The Labor Department’s latest report reveals that the United States has recorded its biggest drop in weekly jobless claims in three months. According to the new data, weekly jobless claims decreased by 38,000 to 326,000 on the week that ended October 2. Meanwhile, continuing claims dropped by 97,000 to 2.714 million. This data now suggests that the labor market is on its way to recovery after any lingering problems kept workers from re-entering the workforce.
For the past few weeks, there have been many weekly job reports that detailed rising claims, rather than the ideal decreasing ones. However, even as weekly jobless claims increased for the past few weeks here and there, economists were not too worried. They were optimistic that the labor market would eventually work through these weeks, stating that labor market recovery would not happen immediately or overnight. Now, however, this latest week hints that a recovery of the labor market may be finally among us.
This is likely for many reasons. Possibly the most obvious and the most impactful has to do with the Delta variant of COVID-19. Recently, for the past few weeks, Delta cases have dropped around the country. This slowdown of infections comes amid months of surging cases that likely kept many from reentering the workforce.
Students returning to school may have also helped with jobless claims and with new hires. Many economists suggested that once students returned to school in the fall, parents would be able to return to the workforce as well. While we didn’t see this play out in August, we might see it play out in the government’s monthly job report for September.
When it comes to weekly jobless claims, claims dropped in various places around the country. The most notable decreases came from California (which led in dropped claims for the last week), Michigan, Missouri, Ohio, and Washington DC.
For the last few weeks, claims increased, mainly because California moved people from one program to another, which caused claims to be increased as a result. Now, however, it looks like this move of programs will no longer be impacting the weekly jobs report as it previously did.
This latest data from the Labor Department is great news for the economy, especially if the next few weeks mimic this drop on weekly claims. The labor market has struggled for the past few months after the pandemic, even though economists earlier this year and in the summer thought that many people would easily return to the workforce. This didn’t happen, for many reasons.
Workers had COVID-19 concerns, childcare concerns, or for other reasons didn’t easily return to the workforce in mass waves. This caused economists to temper their forecasts and better understand the labor market, and how workers were returning to work. Childcare has become a major issue in the United States amid the pandemic, and many parents this summer were without an accurate option, which may have kept many from work. Now, however, this may be just about the change.