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Initial claims for state unemployment benefits totaled a
seasonally adjusted 730,000 for the week ended Feb. 20, compared
to 841,000 in the prior week, the Labor Department said on
Thursday. Economists polled by Reuters had forecast 838,000
applications in the latest week.
Claims have been out of sync with an improvement in overall
economic conditions as the winter coronavirus wave recedes and
$900 billion in additional pandemic relief money provided by the
government at the end of December flows through the economy.
Daily coronavirus cases and hospitalizations have dropped to
levels last seen before the Thanksgiving and Christmas holidays,
allowing more services businesses to reopen. Retail sales
increased by the most in seven months in January. Consumers'
perceptions of the labor market also improved this month.
The persistently higher claims have been partially blamed on
fraud in Ohio. A global semiconductor chip shortage has forced
temporary closures and shift reductions at some motor vehicle
assembly plants. In the coming week, claims could be boosted by
the stormy weather in the South, which left large parts of Texas
in the dark and without water for days.
"Measurement issues in the unemployment insurance data are not
becoming any less problematic as time goes on," said Lou
Crandall, chief economist at Wrightson ICAP in Jersey City.
Though claims have dropped from a record 6.867 million last
March when the pandemic hit the United States' shores, remain
above their 665,000 peak during the 2007-09 Great Recession.
Federal Reserve Chair Jerome Powell told lawmakers this week
that the U.S. central bank would keep interest rates low and
continue to pump money into the economy through bond purchases
"at least at the current pace until we make substantial further
progress towards our goals (maximum employment and inflation)."
A resurgence in COVID-19 infections towards the end of last year
and delays in providing more fiscal stimulus sapped considerable
momentum from the economy in the fourth quarter, other data on
Thursday confirmed.
Gross domestic product increased at a 4.1% annualized rate, the
Commerce Department said in its second estimate of
fourth-quarter GDP growth. That was a slight upward revision
from the 4.0% pace reported last month. The economy grew at a
record 33.4% rate in third quarter.
The economy's struggles in the final three months of 2020 are
mostly in the rear view mirror. The sharp rebound retail sales
and President Joe Biden's massive $1.9 trillion recovery
package, which is gaining traction in the U.S. Congress, have
prompted economists to boost their first-quarter growth
estimates to as high as a 6% rate from as low as a 2.3% pace.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
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