• 03
  • March
    2011

A new report indicates that the long-touted economic recovery may actually be happening. According to the United States Department of Labor, new claims for state unemployment benefits fell by 20,000 last week, with 368,000 first-time unemployment claims. This is the lowest number of new claims since May of 2008, which Labor Department officials say is a promising trend.

The decrease went against economist predictions of weekly first-time claims of almost 400,000, which indicates that the labor market may be improving. A reduction in the number of Americans out of work is essential in decreasing the nationwide bankruptcy and foreclosure rates, although an improvement in the housing and credit markets will also be necessary for the country's economy to truly recover.

However, economic analysts say that a drop in the unemployment rate signals job growth, which is an important first step toward economic recovery and health. First-time unemployment claims have now stayed below the significant 400,000 weekly threshold for the second week in a row. More significantly, the four-week average of new unemployment claims dropped last week to 388,500, the lowest such average since July of 2008 and a decrease of almost 13,000 claims.

More good news came in the form of another report, which stated that the fourth quarter of 2010 saw steady productivity growth among U.S. companies. If this level remains steady, it means that employers are likely to increase hiring in order to meet the growing demand for their products or services.

The promising reports come at a good time, economists say. The decrease in unemployment claims and the perceived job market stability means that Americans are likely to be able to deal with an increase in gasoline and food prices.

Source: Reuters, "Jobless claims at 2-1/2 year low, buoy jobs view", Lucia Mutikani, 3 March 2011