Weekly Initial Claims Have Started to Trend Higher but Remain Below the Pre-Pandemic Level

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Initial claims for regular state unemployment insurance rose 1,000 for the week ending May 7, coming in at 203,000 (see first chart). The latest result is the highest level since February 12. Claims have now increased in four of the last seven weeks but remained slightly below the January – February 2020 average of 212,000 prior to the lockdowns for the fourteenth consecutive week. By long-term historical comparison, initial claims remain extremely low.

The four-week average rose for a fifth consecutive week, coming in at 192,750, up 4,250 from the prior week. 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, renewed lockdowns in China, and a new Fed tightening cycle may cause volatility to economic activity in coming months.

The number of ongoing claims for state unemployment programs totaled 1.403 million for the week ending April 23, a drop of 36,493 from the prior week (see second chart). State continuing claims have declined in 13 of the past 15 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 1.440 million for the week ended April 23, a decrease of 38,030 from the prior week. The latest result is the eleventh week in a row below 2 million.

Despite some modest trending higher, initial claims remain at an extremely low level by historical comparison. The overall low level of claims combined with the record-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, the Russian invasion of Ukraine, renewed lockdowns in China, and the start of a new Fed tightening cycle will likely weigh on future economic activity. The outlook remains highly uncertain.