Initial jobless claims for the week ending on Feb. 20 dropped dramatically to a seasonally adjusted 730,000, one of the lowest readings since the pandemic began and well below expectations.
Dow Jones economists expected 845,000 new claims, similar to the 841,000 seen the previous week.
The figure remains higher than the highest pre-pandemic record for weekly claims.
An additional 451,402 people signed up for an emergency unemployment program, Pandemic Unemployment Assistance, bringing the total number of claims to near 1.2 million.
That program, along with a weekly $300 benefit increase and a program to extend benefits, is set to expire on March 14 if Congress does not act. That could end benefits for more than 11 million people and reduce benefits for as many as 8 million others.
Democrats are promising to extend all of the programs before the deadline as part of President Biden’s $1.9 trillion COVID-19 relief bill, expected to advance in the House on Friday.
While the numbers saw a sharp decline, federal watchdogs have warned that claims data is extremely vulnerable to being distorted by processing errors. That raises questions about the true size of last week’s decline, especially as treacherous winter weather disrupted much of the U.S.
“Seasonal related distortions caused a larger than expected decline in first time jobless claims to 730K. Policymakers should take the decline in claims with a grain of salt, which is more than was available for the roads in Texas which froze over during that week,” tweeted Joseph Brusuelas, chief economist at audit and tax firm RSM.
Ohio’s jobless claims have also been driven higher by scammers, according to state officials, artificially inflating the national total of claims. Ohio received an adjusted total of 100,792 claims last week, nearly one-seventh of the national total and far more than any other state.
Despite the data’s limitations, the consistently high level of jobless claims shows how the U.S. remains far from a full labor market recovery nearly a year after the onset of the coronavirus pandemic.
Federal Reserve Chairman Jerome Powell warned lawmakers this week that the U.S. still needs significant economic support through both fiscal and monetary measures to ensure a strong recovery from the pandemic-driven recession.
Andrew Stettner, a labor expert at the left-leaning Century Foundation, said policymakers should be wary of the lower numbers.
“While the number of new unemployment claims has oscillated around the 1 million mark for weeks, the reality is that some 19 million Americans — nearly 1 of every 8 workers — are currently collecting unemployment benefits,” he said.
“In other words, the unemployment situation is far more dire than what a surface-glance look at today’s data may convey.”
Mark Hamrick, a senior economic analyst at Bankrate, noted that bad news could still be coming down the line in the coming weeks as well.
“We need to see what happens in weeks ahead knowing last week’s severe winter storm and power outages affecting Texas and elsewhere could result in some late reporting and processing of new applications,” he said.
Updated at 9:14 a.m.