The jobless claims rate drops to another historic lows and the economy shows strength

Americans are giving up more and more unemployment benefits while the job market remains strong and the economy is showing signs of accelerating.

Initial claims for Employment Benefits dropped to 192,000 during the week ending April 13, which is 5,000 fewer than the previous week (pdf). This means that fewer than 59 Americans out of 100,000 have applied for benefits – a historic record. Economists had forecast that the number of claims would increase to 205,000 last week.

At the same time, retail sales rose 1.6% in March, the highest in 18 months, as households boosted purchases of motor vehicles and other goods, the latest index of consumer spending. recovery of economic growth in the first quarter.

Fears of a sharp downturn in activity intensified late in the year after a series of weak economic reports. But these worries have dissipated in recent weeks with relatively optimistic data on trade, inventories and construction spending, suggesting that growth in the last quarter could actually be higher than the moderate pace recorded in the last three months of 2018.

"Supported by strong labor market conditions and improved wage growth, household spending looks set to rise in the coming months," said Jim Baird, Investment Director at Plante Moran. Financial Advisors in Kalamazoo, Michigan. "Fears about the slowdown in the economy were exaggerated."

Economists polled by Reuters had forecast that retail sales would accelerate 0.9% in March. Retail sales increased 3.6% in March compared with the previous year.

Fed catches up

The unemployment rate stood at 3.8% in March. On 9 April, US Federal Reserve Vice-President Richard Clarida said his positions could further decline, but not lead to excessive inflation. This could reinforce the reluctance of the central bank to raise rates.

Some economists, along with the Trump administration, have long predicted that there will be more workers in the economy, given the historically low percentage of Americans in the labor market, who do not understands only those employed and those who have looked for a job in the last four weeks. This is partly due to the aging of the population, but also to the fact that a large number of people of working age are too degraded to look for a job. Trump, still a cheerleader for the American economic potential, has made her mission to bring these people back.

The results so far are encouraging: in 2018, 70% of new hires were made outside the labor market, said Secretary of Labor Alex Acosta on March 4th.

For 13 consecutive months, the unemployment rate was less than or equal to 4%. @POTUS pic.twitter.com/GmCLgyCyQz

– Secretary Acosta (@SecretaryAcosta) April 14, 2019

The Fed was surprised by this news, Clarida said at a pre-conference conference of the US Federal Reserve Minneapolis on Monetary Policy and Income Inequality.

The low unemployment rate "has been interpreted by many … as suggesting that the labor market is currently functioning beyond full employment," he said.

It now appears that the central bank is catching up.

Clarida oversees a broad review of the Fed's monetary policy-setting system and said that a better understanding of the nature of full employment would be given equal priority, along with an assessment of how best to achieve its objective of inflation of 2%.

He noted that recent job gains have also helped to narrow the gap in unemployment rates between whites and racial and ethnic minorities, and have helped low-income groups catch up on the labor market. economic plan.

"The wage increases over the past two years have been strongest for less educated workers and for those at the lower end of the wage distribution," Clarida said.

Reuters contributed to this report.

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