The number of citizens filing jobless claims went down to 199,000. This was the lowest mark in more than forty years. The Labor Department reported the jobless claims. This portion of a spate of positive news about the economy has signaled that several of the country's recovery wrinkles continue to be smoothed out. It was just the latest good news for the labor market, which is more than three million jobs below the pre-pandemic mark but has seen a robust recovery. It has added more than 580,000 jobs on average per month for this year. Also, the Commerce Department said that consumer spending grew by 1.3% in the previous month. This was the fastest since March. It is a sign that citizens are continuing to spend.
The positive indicators had many economists and banks revising their predictions for GDP growth for the previous three months of the year. They did this following a disappointing third quarter. JP Morgan Chase & Co. also revised its estimate of an annualized seven percent. It went up from five percent. Morgan Stanley moved its forecast to 8.7% from 3%. Chief economist at RSM Joe Brusuelas moved his organization's GDP forecast to 7.2% from 5.6%. He said, "The economy is much stronger than what we had originally understood. The U.S. economy is booming right now. Despite the increase in inflation." The layoffs fell more than 70,0000 for the week ended November 20 compared to the prior week. It is another consecutive week of decreases and a pivotal shift, as jobless claims are now quite under the pre-pandemic levels.
A couple of years ago, the average number of jobless claims was more than 200,000. But, several experts have said that the numbers were a product of the seasonal adjustments. But the decrease is a stark contrast with this time the previous year. There were nearly 700,000 claims filed. It also reflects the narrow labor market, which has firms scrambling to expand and retain their workforces. Senior economic analyst at Bankrate Mark Hamrick said, "It is fair to say we did not see that coming. Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement." President Joe Biden said that the weekly jobless claims are the historic economic progress done by his government. He said, "We have more work to do before our economy is back to normal, including addressing price increases that hurt Americans' pocketbooks and undermine gains in wages and disposable income."
Trade Deficit in Goods Decreased
On the other hand, the trade deficit in goods went down to 14.6% in October. This was according to an estimate by the Commerce Department. It went to $82.9 billion from $97 billion. That is the lowest mark since October of last year. The trade deficit data was seen as a positive signal about the probable easing of supply chain disruption. PNC Bank economist Bill Adams stated that the price to ship a freight container between Shanghai and Los Angeles has declined to the lowest mark in the previous couple of weeks in July. He said, "The peak is likely past for the trade deficit. The trade deficit surged as American consumers splurged on consumer goods during 2020's lockdowns and continued to rise in the summer and autumn of 2021 as the turmoil in global shipping freaked out importers, who front-loaded purchases ahead of the holiday shopping season.”
“The supply chain is coming unclogged now. Shipping costs will likely continue to fall as the seasonal slowdown in China-to-U.S. imports hits in the first quarter. Energy shortages in Europe and China weigh on demand for industrial commodities over the winter months. These releases vindicate the argument that the problems that held back the economy in the third quarter were temporary."
The Economic Picture is Complicated
Unemployment is still more than it was before the coronavirus pandemic. Many more employees have left the workforce entirely because of issues such as child care concerns. This is a major puzzle for the policymakers who want to get millions of citizens back to work. The coronavirus cases are an ever-present threat to the recovery of the economy. They are increasing in many parts of the nation. This is a growth powered by many citizens who have not got vaccinated yet. Many workers do not want to get back any low-paid work. So, rising prices, worker shortages, and supply chain issues are unpredictable economic forces. There are concerns about growing inflation for the Federal Reserve that remains a challenge from Chairperson Jerome Powell. He has got a second term from President Biden. He has always said that high prices will only be a temporary feature of the economy.
The Federal Reserve will not control inflation by increasing interest rates until the labor market has completely recovered. But the minutes of the policy meeting of the Federal Reserve show the uncertainty of the Federal Reserve about the direction of inflation in the following months. Officials believe that inflation will decrease greatly following the year as supply chains reopen and clear their backlogs. The Federal Reserve officials are not going to increase the rates till next year. In the meantime, the Federal Reserve is rolling back its vast asset purchase scheme. This has been a support for the market through much of the pandemic era.
The expectation is that the program will be completed by the middle of next year. But in recent times, there is an increasing number of Federal Reserve officials who want a faster speed given the growth in hiring and rising costs. San Francisco Federal Reserve President Mary Daly said, "If things continue to do what they have been doing, then I would completely support an accelerated pace. Yes, people are upset about rising gasoline and food prices. But it is not getting in the way of them getting out and working and spending." There are some signs that officials in the government are battling an issue about the perception as much as the practical situation on the ground. There are some robust recovery signals, but most of the citizens surveyed rated the economy negatively. This included nearly forty percent that are in poor health.
Experts say that the public is dissatisfied because of growing prices in recent times. But the nation's bitter partisanship divide is also responsible for the attitudes about the economy. The media also refract the divide.
The monthly jobs report of the Labor Department will be released in the following week. It is going to give more light to the labor market. It has been improving at a good pace this year. Overall, the nation has got back nearly six million jobs lost in the coronavirus pandemic this year. The hiring was good in October. The country added more than 530,000 jobs. It set the unemployment rate to 4.6% from 4.8%. The country still needs to get back more than three million jobs to get to where it was before the coronavirus pandemic.