Around 793,0000 Americans filed a first-time unemployment claim last week, slightly down from the previous week's revised total of 812,000. Economists had forecast 760,000 claims.
Following a spike in coronavirus cases due to holiday travel and family gatherings, the lower number comes after the loosening of restrictions in some states, including the end of a lockdown in California and the return to higher capacity dining in some big cities.
A rash of positive recent economic data has economists and executives forecasting growth for the second half of 2021, propelled by a widespread vaccination rollout and President Joe Biden's fiscal stimulus package. Wall Street traders’ expectations of a rebound have largely been met with positive quarterly reports, and the Congressional Budget Office found that real GDP is expected to bounce back to its pre-pandemic level by the middle of this year, growing by 3.7 percent in 2021, even without any additional stimulus.
Lawmakers are currently debatingBiden's $1.9 trillion fiscal relief package, which focuses on a new round of stimulus checks to struggling Americans and an ambitious vaccine distribution plan to control the deadly pandemic.
The Biden administration, which has stressed its priority of "shots in arms," recently announced it would increase the supply of vaccines by more than one-third. Since Biden took office, the number of doses being sent to states has increased by 28 percent to 11 million doses a week as Pfizer and Moderna ramp up production, White House Covid-19 coordinator Jeffrey Zients said on Tuesday.
“It’s the manufacturers doing a good job and the president and the team doing all we can to support that manufacturing,” Zients said. The Biden administration announced last week it would use the Defense Production Act to get Pfizer additional equipment to further increase production.
As the pace of vaccinations gains traction and restrictions are lifted, "it is reasonable to expect accelerating hiring gains in the coming months," said Mark Hamrick, senior economic analyst for Bankrate, noting that consumers will be "more enthusiastic, and able to spend, as science is victorious over the pandemic."
"If and when passed, the [stimulus] package should provide a bridge for those suffering from job or income loss to the later portion of the year when improvement ought to have been seen by then," Hamrick added.
In a virtual speech Wednesday, Federal Reserve Chairman Jerome Powell painted a bleak picture of the current jobs market, saying, "We are still very far from a strong labor market whose benefits are broadly shared. Employment in January of this year was nearly 10 million below its February 2020 level, a greater shortfall than the worst of the Great Recession's aftermath."
Powell noted that almost 5 million people left the workforce last month, partly due to obligations such as child care and supporting remote learning for school-aged children, and partly due to a fear of contracting the virus.
"Extended periods of unemployment can inflict persistent damage on lives and livelihoods while also eroding the productive capacity of the economy," Powell warned. He highlighted the damage to the leisure and hospitality sector, which "dropped over 1/2 million [jobs] in December and a further 61,000 in January."
With the majority of restaurants and hotels still operating under restrictive measures to prevent spread of the coronavirus, leisure and hospitality remains the hardest-hit sector of the economy, with an unemployment rate almost three times that of the official unemployment rate.
Roger Dow, president and CEO of the U.S. Travel Association, said in a statement: “The math is pretty easy: The U.S. economy won’t get back on track until the Leisure & Hospitality sector is back on track, and that’s going to take aggressive policy actions. Safely restarting travel needs to become a national priority, which means not only relief measures but pressing ahead on vaccinations and continuing to emphasize best health practices."