Weekly Initial Claims Remain Below Pre-Pandemic Level for Eleventh Consecutive Week

Initial claims for regular state unemployment insurance fell slightly, decreasing 2,000 for the week ending April 16, coming in at 184,000 (see first chart). Claims continue to bounce around week to week but have posted declines in nine of the last thirteen weeks. Despite the volatility, claims remained below the January – February 2020 average of 212,000 prior to the lockdowns for eleven consecutive weeks. By long-term historical comparison, initial claims remain extremely low.

The four-week average rose for a second consecutive week, coming in at 177,250, up 4,500 from the prior week and is just the third increase in the last 11 weeks. Weekly initial claims data continue to suggest the labor market remains very tight. However, disruptions to the global economy due to the Russian invasion of Ukraine and the start of a Fed tightening cycle may cause volatility to economic activity in coming months.

The number of ongoing claims for state unemployment programs totaled 1.568 million for the week ending April 2, a drop of 86,886 from the prior week (see second chart). State continuing claims have declined in ten of the past twelve weeks and have been below their pre-pandemic level of 2.111 million since October 2021 (see second chart).

The latest results for the combined Federal and state programs put the total number of people claiming benefits in all unemployment programs at 1.622 million for the week ended April 2, a decrease of 88,031 from the prior week. The latest result is the eighth week in a row below 2 million.

Despite some volatility, initial claims have trended lower in recent weeks and remain at an extremely low level by historical comparison. The overall low level of claims combined with the high number of open jobs suggest the labor market remains very tight. The tight labor market remains one of the strongest parts of the economy, providing support for consumer attitudes and consumer spending.

However, continuing labor shortages, along with materials shortages and logistical issues, are likely to continue to slow the recovery in production across the economy and sustain upward pressure on prices. In addition, geopolitical and global economic turmoil as a result of the Russian invasion of Ukraine has had a dramatic impact on capital and commodity markets, launching a new wave of disruptions to businesses. Furthermore, the start of a new Fed tightening cycle will likely weigh on future economic activity. The outlook remains highly uncertain.