Unemployment Claims Fall To Lowest Level Since Pandemic's Start
STEVE INSKEEP, HOST:
We got some encouraging news about the job market this morning. The Labor Department says weekly unemployment claims have fallen to their lowest level since the start of the pandemic. Unemployment claims are still pretty high by historical standards. But last week, fewer than 1 million people applied for new unemployment benefits, a sign of an economy that is healing from the worst crisis since the Great Depression.
Federal Reserve Chairman Jerome Powell reflected on that earlier this morning in a conversation here on MORNING EDITION. We're going to recap that with NPR's Scott Horsley. Scott, good morning.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: And let's start actually with the news. What did the unemployment numbers show?
HORSLEY: They show that 926,000 people applied for unemployment benefits last week. That's the lowest since the pandemic struck more than a year ago. It includes 684,000 people who applied for state benefits, plus another 242,000 who applied under the federal program for gig workers and the self-employed. So you know, under a million doesn't sound like much, but it is an improvement.
INSKEEP: Better than over a million, I suppose. But 926,000 is still a lot.
HORSLEY: Yeah. I mean, the numbers are getting better, but they're still really bad by historical standards. And just to put this in context, as of March 6, nearly 19 million people in this country were receiving some form of unemployment assistance. That includes 13 million who are relying on emergency programs that were going to lapse this month had it not been for that $1.9 trillion aid package that Congress passed and President Biden signed a couple of weeks ago. So there's still a really long way to go to get back to a healthy job market. But the decline in weekly unemployment claims is an encouraging sign, you know, coming more than a year after this pandemic recession started.
INSKEEP: OK. So Jerome Powell, the Fed chairman, was on MORNING EDITION earlier today. And, of course, we talked about the improving outlook, including the Fed's own forecast, which matters because they make their own prediction of the economy and use it to set interest rates. How has the Fed's forecast changed recently?
HORSLEY: It's gotten a lot better. They now see the economy growing at 6.5% this year, which would be the fastest pace since the early 1980s.
HORSLEY: They see the unemployment rate falling to 4.5% by the end of this year. Both of those projections are a lot better than people might have imagined during the worst of the downturn. Partly, Powell said, that's a result of the improving public health picture. You know, 85 million people have now had at least one shot of the COVID vaccine. People are giving out 2.5 million shots every day. That's going to help the economy reopen more quickly than might have been expected. At the same time, of course, as we say, Congress has been pouring a lot of money into lifelines for struggling families and businesses. And then there's the Federal Reserve's own response. You know, Powell said when financial markets were in freefall last year, the Fed acted really quickly and aggressively to prevent an even worse collapse.
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JEROME POWELL: I liken it to Dunkirk, you know. When - it was time to get in the boats and get the people, not to check the inspection records and things like that. Just get in the boats and go. And that's what we did. I think, overall, it was a very successful program. And I think history will treat it well. But I'm sure that we'll learn some things we could do better.
HORSLEY: A year later, the bond market has stabilized, and the stock market's not only recovered, but has been hitting new highs in recent weeks.
INSKEEP: Well, Scott, what did you think about when we talked about climate change earlier today? The Fed has been discussing things like climate stress tests for banks, looking at what kind of loan portfolios they have.
HORSLEY: Yeah, this is controversial in some quarters. There are some Republicans in Congress who argue that climate change is none of the Fed's business. They're worried it could jeopardize financing for fossil fuel interests. Powell says this is just part of the Fed's traditional mandate to make sure banks and others are looking at and preparing for all kinds of risks, including climate change.
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POWELL: The interesting thing is that all of the large- and medium-sized banks are asking themselves these very same questions - and so are non-financial corporations. It has never been our role or our practice to tell financial institutions which legal businesses they can and can't, should or shouldn't lend to. We don't allocate credit at the Fed. That will be something that, again, elected representatives have to take on over time.
HORSLEY: So even though some of those elected representatives are challenging Powell on this program, he's sticking to his guns.
INSKEEP: NPR's Scott Horsley, thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.