US jobless claims at lowest level since 1969

In the US, fewer workers filed for unemployment benefits last week than at any time since 1969.

Just 187,000 people filed for unemployment, the Labor Department reported. That was around 28,000 fewer than in the previous week.

The numbers show a sharp turnaround in the US labor market since the start of the coronavirus pandemic.

The news sparked several historic comparisons on social media, with some sharing photos from the Woodstock music festival.

“The last time jobless claims fell that low was the same year we people landed on the moon,” said California Democrat Rep. Ted Lieu.

“The last time weekly jobless claims were this low, the Beatles were still together,” added Virginia Democrat Rep. Don Beyer.

Many in the US economy are looking backwards these days, but it has not been easy for economists and analysts to agree on the right historical analogies.

When lockdowns hit two years ago, the weekly jobless report hit record highs, with claims topping six million.

But the economy, supported by a massive government stimulus package, has since roared back with a strength that surprised most analysts.

Growth surged 5.7% last year, while the workforce rose at a healthy pace, rising by more than 600,000 last month, helping to bring the unemployment rate down to 3.8%.

Thursday’s report highlighted the tight labor market, analysts said.

President Joe Biden has sought to acknowledge the gains, pointing to Democratic spending plans and progress in fighting the coronavirus under his oversight.

He celebrated Thursday’s report, calling it another sign of a “historic economic recovery.”

But polls show the public remains concerned about the economy, reflecting prices rising at a pace not seen in 40 years.

Many in the business world are haunted by comparisons to the 1970s, when the US was hit by what is known as stagflation – when growth slowed even as price increases soared, in part due to oil shocks.

David Rosenberg, head of Toronto-based economic research firm Rosenberg Research, said economic indicators — including low unemployment claims — suggest the American economy is headed for a recession — like that of late 1969.

But that doesn’t mean the US economy is in for a repeat of 1970s-style troubles, he added.

He said inflationary pressures spurred by supply shocks stemming from the pandemic and Russia’s invasion of Ukraine will eventually ease.

And he expects productivity gains to drive growth, pointing to investments that companies have accelerated in areas like automation since the pandemic.

“The comparison with the 1970s really catches your eye,” he said. A better comparison, in his opinion, is the temporary inflation after the First World War.

Brad DeLong, an economics professor at the University of California, said the US should try to avoid this example.

At the time, in a bid to control the price hike, the US Federal Reserve doubled interest rates from 3.75% to 7% – a move that prominent economists have since judged to be too late and too far, he noted.

He prefers comparisons from the late 1940s and early 1950s, when the economy was changing in response to World War II and the Korean and Cold Wars.

“I could be wrong. The uncertainty is widespread. Everyone is currently reaching back in time and looking for their favorite episode of past historical inflation as an analogy,” he said.

“Maybe we’ll see something completely new.”