The US unemployment claims is always closely watched by the industry as it is an indication of the economy of the country. Fewer claims mean that the number of jobless people is lesser, which is a great factor to predict the economic conditions of the country. In the last week, the US unemployment claims has reduced to 234,000. This number is equivalent to what it was in the 1970s. This number is in fact the lowest in the past 40 years.
The new unemployment claims number is much better than the 1970s because the labor force has increased in the past four decades. When you consider the rate of jobless claims, it is almost 50% less than what it was in 1970s. This can be a change in the economic conditions of the country. The improvement in the economy has helped the organizations to cut down on layoffs. With the economy improving positively, the enterprises understand that the labor cost will be higher in the future and they want to hold on to the workforce they currently have. As a result, the number of Americans who apply for the unemployment checks have reached a historically lower level.
In the past 98 weeks, the unemployment claims stayed below 300,000. The unemployment rate is calculated to be 4.7% and economists call this as full employment. The improvement is not just related to the workforce because the wages are increasing as well. While many experts want the wages to increase quickly, they are happy that the wages are going in an upward trend. The labor market trend is more accurately represented by the average monthly claims. The average claims reduced by 10,250, reaching the lowest level since the November of 1973. The average for one week is not useful in gauging the economic conditions, but the monthly average will help in that aspect.
Economic experts suggest that the economic condition is as good as it is going to be. Everyone will be thrilled when the unemployment rate reduces further by another percentage. As the real wages climb up, the employers are cautious with the labor force they possess. The increasing cost of labor could make it difficult for employers to look for cheaper labor. The economists are hoping for a much faster growth, but it is far fetched at the current pace. The only way to accelerate growth is to reform the supply side. This doesn’t mean lower taxes but reformations must be encouraged in other areas.
Some experts suggest that license should be addressed so that the labor market might be freed up a bit. Reducing rent seeking will also prove to be good. This will be useful only if the tax system is modified to give more importance to land and consumption instead of focusing on capital and corporations. When the macro economy is optimized, more focus could be given to the micro economy. There is so much work to do to optimize economic growth and the nation is pinning its hopes on the new administration.