U.S. Jobless Claims Fell to 364,000 Last Week, a New Pandemic Low Worker filings for benefits are down by about 50% since the first week of April but remain above pre-pandemic levels
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Worker filings for jobless benefits fell to a new pandemic low last week and resumed a monthslong downward trend, adding to signs of a recovering labor market.
Initial jobless claims fell by 51,000 to a seasonally adjusted 364,000 in the week ended June 26 from the prior week’s revised total of 415,000, the Labor Department said Thursday.
The drop brought the four-week moving average, which smooths out volatility in the weekly figures, to 392,750, also a pandemic low. Jobless claims, a proxy for layoffs, are down by about 50% since the first week of April, but remain above pre-pandemic levels.
“We are seeing labor-market progress,” said AnnElizabeth Konkel, an economist at job-search site Indeed. She added that “we still have just a little bit more ways to go” before unemployment claims reach pre-pandemic levels.
Initial claims were at 256,000 on March 14, 2020, as Covid-19 took hold in the U.S. The 2019 average for claims was 218,000.
Filings for jobless benefitsSource: U.S. Employment and Training Administration via St. Louis FedNote: Seasonally adjusted.
numberRECESSION2019 weekly average: 218,000Week ended June 26364,000July 2020'210.000.250.500.751.001.251.50
Thursday’s decline in unemployment claims came ahead of the June U.S. employment report, set to be released by the Labor Department on Friday. Economists project that employers created 706,000 jobs last month and that the unemployment rate fell to 5.6%.
Even with such gains, the labor market would still be around 6.6 million jobs smaller than just ahead of the pandemic. “There are still many things in the air for this economic recovery to be stable—vaccination rates, the evolution of new strains, the rest of the world’s economy,” said Alfredo Romero, an economist at North Carolina A&T State University.
As Covid-19 infections eased, states more fully lifted business restrictions, spurring activity across industries. Consumers began spending and traveling more, helped by government aid distributed earlier in the year. Consumer spending, the main driver of economic growth, is primed to aid the recovery over the summer. Meanwhile, job openings reached record levels this spring and businesses have ramped up investments in capital.
The recovery has been uneven. While hiring has picked up, it has lagged behind gross domestic product growth as workers remain sidelined because of expanded unemployment benefits, increased child-care responsibilities and other factors.
Supply-chain disruptions also continue to hobble business. Ford Motor Co. this week said the global computer-chip shortage will force it to cut output at more than a half-dozen U.S. factories. These factors have pushed up prices, raising inflation worries.
So-called continuing claims, or benefits distributed, for all state and federal pandemic programs remain high but declined slightly in the week ended June 12 to 14.7 million on an unadjusted basis, with 3.2 million accounting for regular state programs and most of the rest from pandemic-related assistance. Continuing claims gives an approximation of the number of people receiving benefits.
Benefits distributions are projected to continue falling over the summer as the labor market continues to improve and states cancel enhanced and extended pandemic-related benefits. Twenty-two states in June ended participation early in federal programs that are set to expire in early September. Four more are expected to do so in July.
Analysis by Jefferies LLC economists indicates that the enhanced federal benefits have had an impact on unemployment rolls. “The backup in continuing claims was driven entirely by states remaining on enhanced benefits until September,” a Jefferies report said. “Since mid-May, claims are down 12.6% in early expiration states and just 3.4% in September expiration states.”
Leah Clapper, a senior gymnast at the University of Florida, has been blogging about food longer than she’s been tumbling for the Gators. Her blog was popular enough to draw attention from brands who wanted to promote her via paid Instagram posts. But she always had to say no, as such payments would have violated the NCAA’s long standing amateurism rules.
“It was kind of unfair, because anybody else can do this, except for a student athlete,” she said. “But those were the rules and one of the biggest goals in my life was to be a college athlete.”
As of Thursday, however, those rules are history—and Clapper is a member of the first class of college athletes who will benefit.
State laws in Florida and a handful of other states have taken effect, allowing college athletes to make money from their name, image and likeness. The NCAA, under pressure to loosen its tight grip on athlete compensation, is adopting an “interim policy” allowing college athletes everywhere to do the same. The furious change also follows a unanimous Supreme Court decision in June that found the NCAA’s strict limits on compensation violate U.S. antitrust law.
Much of the focus has been on the ways in which Heisman Trophy winners and big-time basketball stars will be able to cash in. But the rule changes may be just as profound for athletes like Clapper, who are not household names but whose platforms will never be bigger than when they are undergraduates.
They often enjoy local celebrity and have big social-media followings, especially among avid fans of their sport, but aren’t headed for professional careers. They may not rake in six-figure sneaker deals, but they could earn comfortable sums that turn them into the rare college students not magnetically drawn to free pizza.
That’s the case for Clapper. She isn’t headed for the Tokyo Olympics. Two years from now, you won’t find her pirouetting on a balance beam at all. She plans to swap leotards for business casual once her NCAA eligibility expires.
“If you don’t do something now, [your platform] is just going to dwindle the further and further away you get from graduation,” said Clapper, who plans to use the extra year of eligibility the NCAA granted athletes during the pandemic to compete through 2023. “I am so excited about this happening before I actually graduate.”
An avid cook, Clapper launched a food blog called “Zest and Finesse” as a high-schooler in 2018 to channel her passion for baking. When brands approached her to collaborate via paid Instagram posts, she thought it might become a profitable side hustle. Then she learned of the NCAA compliance rules and had to rebuff all of the offers.
When Florida Gov. Ron DeSantis signed a law last year allowing athletes in the state to cash in starting July 1, 2021, Clapper immediately grasped that saying yes to deals no longer carried an opportunity cost of losing her eligibility and got to strategizing.
In December 2020, Clapper launched a podcast called “Zest and Progress” that aims to provide motivation for gymnasts. She started it because she loves listening to podcasts and loves to talk, but also because she thought it could be a vehicle for monetizing her NIL come July 2021.
“I wanted to have a platform that I could use to capitalize on my brand, but also help other college athletes expand their own brands. It’s a win-win situation,” she said.
Clapper didn’t stop at podcasting, however. During the height of Covid-19 lockdowns, she and her former gymnastics coach in her native Michigan developed a board game played by executing skills on the balance beam. They hope to sell it to local gyms. She also thought of turning her quarantine baking projects into an ebook of “Clapper Cookies” recipes, including her snickerdoodle, a favorite among Gators gymnasts.
“I’m really excited to experiment once July 1 comes,” she said.
Clapper learned in her advertising classes that the success of her creative ventures would turn on her online presence, which was admittedly thin. She researched how social media influencers grow their followings and applied the tactics to her personal Instagram account.
“It takes time to build up a brand…and I kind of wanted to see if they really worked and came up with my own strategies to try to grow my brand and have fun with it along the way,” said Clapper. As of Wednesday evening, she’s almost tripled her following on Instagram to about 5,370 from 2,008 last June.
As an upperclassman who will soon be applying to jobs at advertising agencies, there weren’t many better ways to show potential employers her mettle than building her own social media presence. Plus, more followers generally equates with larger paychecks in the influencing economy.
The industry standard for influencer marketing is about 80 cents per follower, said INFLCR founder and chief executive officer Jim Cavale. His company, which includes several Florida universities as clients, offers a mobile app that makes it easier for athletes to share content across their social channels. To prepare athletes for the July 1 rule changes, INFLCR recently added a “FMV” tab to its menu that calculates users’ “fair market value” based on their social media profiles.
It’s possible that some athletes may pull in more than 80 cents per follower. Posting frequently and having a high engagement rate—the percentage of followers who like or comment on posts—drives up value, said Cavale.
“Other variables have to do with what market you’re in and how many of your followers are in that market too,” said Cavale.
Given the makeup of her following, Clapper is an ideal spokeswoman for gymnastics-centric products. Plus, her engagement rate hovered around 21% on her last five posts, a range that is considered to be strong. Based on Cavale’s estimate, she could bring in upwards of $4,300 per year from endorsements on social media.
NIL deals could be even more lucrative for Trinity Thomas, a fellow Florida gymnast who boasts over 52,800 followers on Instagram. She claims she is not that into social media—most of her followers flocked to her after she made the U.S. Senior National Team in 2017 as a 16-year-old—but if she posts more than once or twice per month she could see a $40,000 windfall.
Florida Gators gymnast Trinity Thomas performs during the 2021 NCAA Women’s Gymnastics Championships.
PHOTO: JEROME MIRON/REUTERS
There’s even more money on the table for Thomas offline. After realizing an ankle injury would keep her from competing at U.S. Olympic Team Trials in June, she signed on to volunteer at three gymnastics clinics in California, Tennessee and her native Pennsylvania. In the future, she might be able to host her own “Trinity Thomas Tumbling Academy.”
“I love kids, so camps are right up my alley,” said Thomas. “I know I will definitely take advantage of the opportunity and I’m excited for it.”
Although Thomas may see her platform grow if she continues competing professionally after graduation, she knows that gymnasts do not have long careers. That’s starting to change with the likes of 24-year-old Simone Biles dominating for half a decade and Chellsie Memmel making a comeback at 32, but those women are outliers.
Similarly, Clapper knows that the biggest stage she will ever tumble on is the one she’s afforded at the University of Florida. She also knows her time there is ticking down. That’s why she spent the better part of the past year getting ready for the rules to change July 1.
“Realistically, I’m going to have more success with my personal brand—Leah Clapper the gymnast at the University of Florida, not Leah Clapper the food blogger who is also a D1 athlete,” she said.
The Dow Jones Industrial Average surpassed 40,000 points on Thursday for the first time ever, signaling a strong endorsement of the health of the U.S. economy.
The trigger that drove the market to a historic high was new data released Wednesday showing annual inflation easing after three consecutive months of higher-than-expected reports.
For investors the news of cooling inflation was a huge relief. Stubborn inflation has been one of the top challenges for an economy that otherwise is doing remarkably well.
The question now is whether these gains in the markets can be sustained. The Dow eventually gave up its earlier gains and ended down slightly at 39,869 points.
Here are three things to know about where things stand in stock markets.
Investors had started the year brimming with optimism about the economy.
Some of that hope still remains. Growth has been remarkably sturdy. The labor market has been doing incredibly well. And corporate profits have been largely booming.
The biggest unknown remains inflation. The Federal Reserve has raised interest rates to their highest in over two decades in order to cool prices.
The interest rate hikes have impacted the economy by pushing up the cost of loans, like mortgages and car loans. High prices and high interest rates have been a double whammy for consumers.
After a string of higher-than-expected inflation reports in January, February and March, optimism began to evaporate.
Finally, investors got a reprieve with Wednesday's government report which showed annual inflation easing to 3.4% in April from a year ago. It was also lower than the previous month and in line with expectations.
Now, practically speaking, hitting 40,000 is really no different from any other number.
But it represents a major psychological milestone.
Easing inflation could allow the Fed to finally start cutting interest rates, bringing a little relief to millions of people who carry debt, whether in credit cards or home loans.
It could raise renew hope for that cherished "soft landing" — when the Fed can manage to cool down prices without sparking a recession.
"The idea that the economy can keep moving along while the inflation numbers come down, that's got everyone excited," says Marc Dizard, the Chief Investment Strategist for PNC Asset Management Group.
But the market rally is also about AI
The bullish markethasn't been just about the economy.
Since last year, broader stock markets have been helped by pumping up companies tied to the new investment craze: artificial intelligence.
Gains have been largely driven by seven companies widely referred to as the "Magnificent Seven."
Microsoft CEO Satya Nadella delivers a speech at the Microsoft Build AI Day in Jakarta, Indonesia, on April 30, 2024. Artificial intelligence has been a hot trend in markets.
Adek Berry/AFP via Getty Images
Those companies — Microsoft, Amazon, Apple, Alphabet, Meta, Nvidia and Tesla — have helped push up broader markets.
Only three of those companies are in the Dow Jones index. Nonetheless a rally in technology shares can still have a spillover impact on the Dow.
All three major indexes, including the S&P 500 and the Nasdaq, hit record highs earlier on Thursday.
The outlook for markets: proceed with caution
Despite the gains on Thursday, and the milestone for the Dow, future gains are still in doubt.
"We like we like it when the Dow hits 40,000, don't get us wrong," says Dizard at PNC Asset Management. "But we just think you have to approach it with caution."
The Fed had previously signaled it could cut interest rates three times this year. But that is now unclear after disappointing inflation data earlier in the year.
And the economy has held up pretty well, but it could still slow down and potentially even tip into recession if interest rates remain high.
As high interest rates continue to pose a burden on consumers, it can make it more expensive to pay down their debts.
Ultimately, though, a lot of whether the stock markets can be sustained will likely depend on one thing: where things go with inflation.