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U.S. jobless benefit claims continue to grind lower

Applications for benefits sink 13,000 to pandemic low 553,000

Jobless benefit claims fell to 553,000 last week from a revised 566,000 a week earlier, the U.S. Labor Department said Thursday. With the revisions, this is the lowest level of claims since the pandemic struck last year. Economists surveyed by the Wall Street Journal had been looking for a drop to 528,000 new claims. Claims in the prior week were revised from the initial estimate of 547,000. The four-week moving average for claims, which smooths out volatility, fell 44,000 to 611,750. That is the lowest level since March 2020. Texas and Wisconsin had big drops in claims last week. Virginia, Rhode Island. Michigan and West Virginia experienced sizable gains. Applications for benefits were filed last week through a temporary relief program fell by 11,609 to 121,749. The number of people already collecting the traditional unemployment benefit increased a slight 9,000 to a seasonally adjusted 3.66 million in the week ended April 17. Workers getting extra benefits through an emergency program funded by the federal government fell by 413,224 to 5.2 million. Workers can claim these benefits until September.

Taken together 16.5 million people were collecting benefits from eight separate state and federal programs as of April 10, down from 17.4 million in the prior week.

Jobless claims are a proxy for layoffs. Claims have been trending lower as the economy reopens and the labor market improves. Economists think this trend will continue. “Barring a resurgence in virus cases and a reversal of the progress made on reopening, we doubt that we will see a significant back up in claims anytime soon,” said Thomas Simons, economist at Jefferies.

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U.S. Economy Appears to Be Lifting Off

U.S. Economy Appears to Be Lifting Off

GDP likely grew robustly in the first quarter as the government distributed Covid-19 stimulus checks and consumers stepped up spending

The U.S. economy appears to have expanded rapidly in the first quarter, extending what economists project will be a robust, consumer-led recovery from the pandemic this year. Fueled by a flood of federal cash to households and rising vaccinations, the nation’s gross domestic product likely grew at a 6.5% seasonally adjusted, annual rate in the first three months of 2021, according to economists surveyed by The Wall Street Journal. Official figures on GDP—the broadest measure of goods and services produced across the U.S—are set to be released by the Commerce Department on Thursday at 8:30 a.m. ET. Output grew at a 4.3% rate in the fourth quarter of last year after rising at a 33.4% clip in the third. The rebound from a steep downturn last spring early in the pandemic was quicker than what many economists expected but still left the economy in a hole. For all of last year, the economy shrank by 2.4% when comparing fourth-quarter output to a year earlier—the first contraction since the 2007-09 recession. The recovery likely accelerated in the first quarter as more people received a Covid-19 vaccine, states and cities lifted business restrictions, and stimulus payments landed in bank accounts. Consumer confidence rose in April to the highest level in 14 months, the Conference Board said Tuesday. “The U.S. economy is clearly in the nascent period of the recovery and headed for a robust expansion,” said Joseph Brusuelas, chief economist at RSM, a consulting firm. It is possible first-quarter output may have returned to pre-pandemic levels, he said.

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Bars and restaurants reopen as Italy eases COVID-19 restrictions, in Rome

Bars, restaurants, cinemas and concert halls will partially reopen across Italy Monday in a boost for coronavirus-hit businesses, as parliament debates the government’s 220-billion-euro ($266-billion) EU-funded recovery plan. After months of stop-start restrictions imposed to manage its second and third waves of Covid-19, Italy hopes this latest easing will mark the start of something like a normal summer. Three-quarters of regions will drop into the low-risk “yellow” categories from Monday, with bars and restaurants permitted to restart table service outside — including, for the first time in six months, in the evening, although a 10:00 pm curfew remains in place. “Finally!” said Daniele Vespa, the 26-year-old head waiter at Baccano, a restaurant near Rome’s Trevi Fountain, as he made preparations for the return of customers. “Hopefully… we can soon reopen inside as well,” he told AFP, adding: “It’s the start of a return to normality.” Cinemas, theatres and concert halls can also open at 50-percent capacity, followed by the staggered opening of swimming pools, gyms, sporting events and theme parks by July 1. Prime Minister Mario Draghi has been under intense pressure from regional governments and increasingly regular street protests to ease restrictions, as Italy battles its deepest recession since World War II. He has admitted to taking a “calculated risk”, as infection rates and intensive care admissions fall but deaths still mount at more than 300 every day to more than 119,000. The vaccination programme is gaining pace with more than 17.5 million jabs administered so far in a population of around 60 million, but there are disparities between regions. “Clearly if the gradual reopening is interpreted as a ‘free-for-all’, a new surge in infections risks compromising the summer season,” warned Nino Cartabellotta, head of the GIMBE Foundation health think tank. Italy was the first European country to be hit by the pandemic in early 2020 and remains one of the worst affected, with the EU’s highest reported death toll and one of the deepest recessions. The economy contracted by a staggering 8.9 percent last year and a million jobs have been lost. Italy is pinning its hopes on a 222.1-billion-euro investment and reform plan funded largely by the European Union. Rome is the biggest recipient of the bloc’s 750-billion-euro post-pandemic recovery fund. In parliament on Monday, Draghi will formally present the programme he hopes will boost growth by 3.6 percentage points by 2026, ahead of a Friday deadline to submit the package to Brussels. In a statement Sunday, the government said the plan was a “historic intervention” that would repair the damage caused by the pandemic and address “the structural weaknesses” of the Italian economy, while putting it on a greener footing. Priorities include infrastructure, notably high-speed railways; green energy, including hydrogen power projects; investment in internet services and digitalisation. There will be money to help women and young people, who have disproportionately lost out during the pandemic, while around 40 percent will be targeted at historically under-performing southern Italy. Draghi, a former European Central Bank chief, has also highlighted the importance of reform, and the plan sets out an “ambitious programme” focused on modernising notably public administration and the snail-paced justice system. Disputes over the spending plan brought down the previous prime minister and his coalition, after which Draghi was parachuted in to lead a national unity government in February. His broad support in parliament “gives him significant room for manoeuvre to deliver the necessary reforms”, noted Jesus Castillo, an economist at Natixis.

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Paul Krugman Is Pretty Upbeat About the Economy

Paul Krugman is one of the world’s most influential and provocative economists. Although Krugman made his professional mark in academia, where his work on trade and economic geography earned him a Nobel prize in 2008, it is his commentary that has brought wider public recognition. Last week, Bloomberg Opinion writer Noah Smith interviewed Krugman online about the state of the U.S economy in the midst of the coronavirus crisis.

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Gottlieb: US may never achieve true herd immunity to COVID

  • “I don’t think we should be thinking about achieving herd immunity,” Dr. Scott Gottlieb told CNBC on Friday.
  • The former FDA chief said the country’s goal should instead be to “keep the level of virus down.”
  • Covid hospitalizations, not just cases, need to be the focus as vaccinations are rolled out, he added.

Dr. Scott Gottlieb told CNBC on Friday he believes the United States may struggle to reach “true herd immunity” to Covid, suggesting coronavirus infections will be around in the years ahead. However, the former commissioner of the U.S. Food and Drug Administration stressed that new cases alone should not be the metric receiving the most focus as more people are vaccinated against Covid. “I don’t think we should be thinking about achieving herd immunity. I don’t know that we ever achieve true herd immunity, where this virus just stops circulating,” Gottlieb said on “Closing Bell.” “I think it’s always going to circulate at a low level. That should be the goal, to keep the level of virus down.” Gottlieb, who serves on the board of Covid vaccine maker Pfizer, said he expects the U.S. to see significant progress toward that goal in the coming weeks. “I think that we are going to get to a point this summer where the circulation of this virus is going to be extremely low. We’re probably going to see cases start to collapse at some point in May, pretty soon. We’re seeing it already in parts of the country,” Gottlieb said. Even so, Gottlieb said, the U.S. could level off somewhere around 5,000 to 10,000 new coronavirus cases per day this summer, partly due to how commonplace Covid testing has become. “We’ll pick up a lot of asymptomatic and mildly symptomatic infection,” he said. “I think the bottom line is that the vulnerability of the American population is being dramatically reduced as a result of vaccination, and that’s really what we need to focus on,” said Gottlieb, who led the FDA from 2017 to 2019 in the Trump administration. “We shouldn’t focus just on cases alone. There will be cases, but we should focus on how many people are being hospitalized and getting sick from this virus, and that’s going to dramatically decline as we roll out the vaccines,” he said. Public health experts have stressed throughout the pandemic that as more people in a population have immunity protection for a particular virus, the less readily it will spread. However, while vaccines have been shown to reduce transmission, Gottlieb is not the first to suggest reaching durable herd immunity for Covid is likely to be challenging. White House chief medical advisor Dr. Anthony Fauci has estimated that 75% to 85% of the population being vaccinated against Covid would create an “umbrella” of immunity. “That would be able to protect even the vulnerables who have not been vaccinated or those in which the vaccine has not been effective,” he told CNBC in December shortly after the FDA granted Pfizer’s vaccine emergency use authorization.

Roughly 41% of the U.S. population has now received at least one Covid vaccine dose and 27.5% is fully vaccinated, according to the latest figures from the Centers for Disease Control and Prevention. More than 220 million total doses have been administered, CDC data shows.

Gottlieb has previously said the U.S. could, in theory, get to a point where Covid is eradicated like other diseases such as polio and smallpox. “It’s possible. We don’t seem to be prepared to do it and take the collective action that it’s going to require,” he told CNBC on April 16. “It will require people exercising some civic virtue to get vaccinated even if they individually feel they’re at low risk of the infection,” he said. “Because even if they’re personally low risk they can still get and transmit the infection, and you can’t eradicate a disease where you have a significant contingent of people who are going to continue to catch it and transmit it.”

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US businesses are growing faster than ever as the economy reawakens

  • IHS Markit’s gauges of the US service and manufacturing sectors climbed to record highs in April.
  • The indexes were boosted by the relaxing of lockdown measures and robust consumer demand.
  • Still, supply chain disruptions weighed on factories and lifted manufacturing costs.

The US economy’s March rebound may have only been a warm-up. Two popular gauges of business activity swung even higher in preliminary April readings, according to analytics firm IHS Markit. The services activity index leaped to 63.1 from 60.4, indicating the fastest level of expansion since data collection began in 2009. The firm’s manufacturing index rose to 60.6 from 59.1, also a record. Markit’s composite index soared to an all-time high of 62.2 from 59.7. Readings above 50 indicate sector growth, while those below the threshold signal contraction. The broad improvements were largely driven by the loosening of economic restrictions and strong demand from consumers, Markit said in the Friday report. Continued vaccination also contributed to stronger activity at service businesses. Manufacturers were able to accelerate production despite lingering supply-chain problems. “The worsening supply situation is a concern for the outlook, especially in relation to prices,” Chris Williamson, chief business economist at IHS Markit, said in a statement, adding that factories “appear to be struggling to boost operating capacity” amid a swelling backlog of orders. The surge in activity and supply-chain pressures led input costs to climb at the fastest rate since 2008, according to Markit. Still, factories reported “markedly upbeat” expectations for the year ahead on hopes that an end to the pandemic and robust demand would drive further expansion. Services reported similarly optimistic outlooks, according to the report. Businesses cited the easing of COVID-19 lockdowns as critical to boosting confidence. Markit’s report signals strong momentum seen throughout March will continue through spring. Indicators tracking the labor market, consumer spending, and sentiment all shot higher last month as the first moves toward a full reopening revived economic activity. Federal Reserve Chair Jerome Powell repeatedly characterized trends seen throughout March as marking an “inflection point” in the US recovery. Still, supply strains hitting the manufacturing sector point to emerging risks. While the rate of private-sector inflation eased from March’s pace, it still registered the second-fastest climb on record. Many businesses surveyed by Markit passed on the costs to their clients and consumers, according to the report. The Fed has signaled that it will wait until inflation steadily trends above 2% before reining in its ultra-accommodative monetary policy. Yet with firms struggling to meet demand and supply chain disruptions lingering, inflation could outpace the central bank’s outlook and place new pressure on the country just as it enters a new normal.

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U.S. leading indicator index suggests economy is gathering momentum

The index of U.S. leading economic indicators rose 1.3% in March, The Conference Board said Thursday. All 10 components of the index were positive, suggesting economic momentum in the near term, said Ataman Ozyildirim, senior director of economic research at The Conference Board. The firm now projects year-over-year economic growth could reach 6% in 2021, he said. The index fell 0.1% in February, revised down from the initial estimate of a 0.2% gain. The separate Chicago Fed National Activity index was 1.71 in March, improving from a negative 1.2 in the prior month. The 3-month moving average of the CFNAI was 0.54 in March following 0.07 in February. The most recent pattern of the CFNAI appears to show the economy reverting to its pre-pandemic trend, said Josh Shapiro, chief U.S. economist at MFR Inc. Earlier Thursday, the Labor Department reported weekly jobless claims fell sharply for the second straight week.

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US jobless claims down by 39,000 to 547,000, a 13-month low

Applications for unexpectedly plunged to a fresh pandemic low as the job market recovery gathers steam. Initial claims in regular state programs decreased by 39,000 to 547,000 in the week ended April 17, Labor Department data showed Thursday. Economists in a Bloomberg survey estimated 610,000 claims. The prior week’s data was revised up to 586,000. The job market is strengthening as employers look to fill positions that were left empty by pandemic restrictions that have now been eased. Growth should speed up even more following a nationwide goal of administering an average of three million vaccinations per day.

 

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Fed’s Waller says U.S. economy is ‘ready to rip’

(Reuters) – The U.S. economy is set to take off as more Americans are vaccinated, the virus gets under control and consumers become more comfortable engaging in economic activity, Federal Reserve Governor Christopher Waller said on Friday. “I think the economy is ready to rip,” Waller said during an interview with CNBC. Waller said he expects the U.S. economy to grow by 6.5% this year, for inflation to rise by about 2.5% and for the unemployment rate to drop to about 5% by year end. The U.S. central bank slashed interest rates to near zero last year to bolster the economy as it was being hammered by the pandemic. Officials also say they will purchase $120 billion a month in bonds until there is “substantial further progress” toward the Fed’s goals for maximum employment and inflation. Waller said that despite the brighter outlook, the U.S. economy still has a long way to go before those targets are achieved. Unemployment rates for minority workers are still elevated, he said. And any price increases seen in the near term are likely to be short lived as bottlenecks caused by the pandemic are resolved and the bump in demand from stimulus checks fades.

“Whatever temporary surge in inflation we see right now is not going to last,” Waller said.

A new U.S. Fed index of inflation expectations hit 2.01% for the first quarter of 2021, the first time the quarterly measure has hit the Fed’s 2% target since mid-2018, according to an update released on Friday. Fed policymakers would be fine with having inflation run above the central bank’s 2% target for some time to make up for periods of undershooting the goal, he said. But officials would act if inflation stayed much higher than that. “We want it to be on average around 2%,” Waller said. “I don’t think anybody would be very comfortable if it got to three or three plus and stayed there for a while.”