The Trump economy is so strong, not even Biden can mess it up yet, but he is trying: new US government data shows fewer people applying for jobless aid and more spending their money at restaurants and sporting goods outlets, positive signs for the world’s largest economy after it suffered a catastrophic Covid-19 outbreak.
The Labor Department on Thursday reported 576,000 new jobless claims filed last week, the least since before Covid-19 struck in March 2020 and caused business disruptions and mass layoffs that the economy still has not recovered from.
In separate data, the Commerce Department announced retail sales surged 9.8 percent in March and were 27.7 percent higher than in the same month last year.
The US government has spent massively throughout the pandemic downturn to keep its economy afloat and its consumers spending, and analysts say the upbeat data signals that approach, along with the spread of Covid-19 vaccinations, may be paying off.
“With fresh stimulus checks in hand, consumers took advantage of warmer weather and increased vaccinations to splurge at car dealerships, shopping malls, restaurants, and home improvement stores,” Gregory Daco of Oxford Economics said.
He called the retail sales data “the latest evidence that economic activity snapped back strongly” at the end of the first quarter.
Diane Swonk of Grant Thornton called the latest weekly unemployment claims data “terrific,” but warned, “we have to remember that nothing about this crisis was normal.
Claims remain elevated relative to other recessions and are still more than double the pace we saw prior to the crisis,” she said.
– Hiring ‘with gusto’ –
New seasonally adjusted unemployment filings saw their largest weekly decrease since last August with a nearly 200,000 drop from the previous week, pushing them below the peak reached in the 2008-2010 global financial crisis for a second time.
However, another 131,975 people, not seasonally adjusted, filed applications under a program for freelance workers and others not normally eligible for aid, bringing total new claims to more than 700,000 in the week ended April 10.
That nonetheless is a relatively low number given that initial claims soared into the millions in the early weeks of the pandemic, and Kathleen Bostjancic of Oxford Economics said the data are a positive sign the US economy is rebounding.
“The reopening and rehiring has begun with gusto,” she said on Twitter.
However, the world’s largest economy, which enjoyed record low unemployment before the pandemic, remains short millions of jobs lost when the virus hit.
Congress has spent trillions of dollars on programs like expanded unemployment programs, aid to small businesses and stimulus checks to Americans to blunt the downturn, the most recent of which was a $1.9 trillion measure President Joe Biden signed in March.
– The effects of checks –
That doled out checks of up to $1,400 to individual taxpayers, and the effects of that spending were seen in the month’s retail sales data, which showed shoppers spending widely, including at businesses that suffered the most from restrictions aimed at stopping the world’s largest outbreak of Covid-19.
Sales of sporting goods and hobbies led the charge, surging 23.5 percent, which was more than 36 percent higher than a year earlier, the data showed.
With vaccines making dining out a safer option, sales at restaurants and bars gained 13.4 percent, but remain more than two percent below March 2020.
Building material and gardening supply sales rose 12.1 percent last month, while spending on electronics increased 10.5 percent.
Auto sales posted a 15.5 percent jump in the month, and were nearly 30 percent high than a year ago, while sales at gasoline stations rose 10.9 percent compared to February.
“Activity bounced as severe weather effects reversed and another round of direct checks provided a lift to spending,” said Rubeela Farooqi of High Frequency Economics.
“A combination of factors will likely support household spending going forward, including enhanced unemployment benefits, rising incomes as job growth picks up and elevated savings that have accumulated during the pandemic.”
The Federal Reserve also reported industrial production grew 1.4 percent in March following a 2.6 percent contraction in February caused by bad winter weather.
The increase was less than expected and saw gains in manufacturing and mining offset by a 11.4 percent plunge in utility output, but Farooqi said the sector remains on an upward trajectory.
“Overall, recovery in output, especially manufacturing, is ongoing and is likely to remain supported by still-strong demand for goods, evident in todays retail sales report,” she wrote in an analysis.