Department of Labor Reports Drop in New Unemployment Claims

Good news as it relates to the job market!

According to Reuters, the number of Americans filing brand new unemployment claims dropped more than expected last week. Today the Labor Department announced initial claims dropped by 23,000 for a total of 340,000. Typically, 350,000 is the benchmark economists reference for a strengthening job market.

As for the drop itself, the implication is the result of the previous week’s jump since employers weren’t laying off workers so readily after hearing about the $85 billion government spending cuts.

The piece pointed out the tighter fiscal policy may have tightened the belt on economic activity but the slow pace may just be temporary as job opportunities grow stronger and home prices increase to boost consumer spending.

Economic activity appears to have cooled somewhat early in the second quarter on the back of tighter fiscal policy, but the slowdown could prove to be temporary as the steady job gains combine with rising share and home prices to support consumer spending.

The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell 112,000 to 2.91 million in the week ended May 11. That was the first time in five years so-called continuing claims were below the three million mark.