The number of Americans filing new claims for unemployment benefits dropped to 498,000 in the week ending May 1, according to the U.S. Department of Labor. That's down from 553,000 reported in the previous week and the fourth consecutive week with claims below 600,000. The four-week moving average was 560,000, a decrease of 61,000 from the last week, the lowest level for this average since March 14, 2020, when it was 225,500.
Unemployment claims are filed by unemployed individuals after a separation from their employers. The claims request a determination of basic eligibility for the unemployment insurance program.
Several factors drive the rapid improvement in the labor market, including the acceleration of the vaccination campaign, the gradual opening of businesses most affected by the pandemic and an accommodative monetary policy.
Then there's current and expected fiscal stimulus, like expanded unemployment benefits and Paycheck Protection Program loans. These benefits and loans are distributed to households and businesses under the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act.
Last week, the U.S. government said real gross domestic product, a measure of the nation's output adjusted for inflation-- increased at an annual rate of 6.4% in the first quarter of 2021, following a 4.3% expansion in the previous three-month period. That was a big turnaround from a year ago when the U.S. economy suffered a significant decline due to the Covid-19 pandemic.
Meanwhile, personal income jumped 21.1% month over month in March, rebounding from a 7% drop in February, the most significant rise on record. In addition, personal spending increased 4.2% from March, the most significant increase in consumption since June 2020.
An improving economy and labor market set the stage for a strong payroll report tomorrow, with estimates placing the number of April job gains in the range of 950,000 to 978,000, up from 916,000 in March.
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