First-time jobless claims eased to 411,000 for the week ending June 19, a slight decline from the revised figure of 418,000 for the previous week, according to government data released Thursday.
The decline in initial jobless claims is indicative of what will be a long road to normalization in the labor market.
The decline is indicative of what will be a long road to normalization in the pace of firings that should culminate in the top-line number moving between 200,000 and 230,000 next year.
The fits and starts in the labor market should be expected and imply that a premature withdrawal of support for the unemployed would be a policy error that will reduce overall economic activity.
There are still 14.8 million people on some form of unemployment insurance, with 3.27 million on regular state unemployment, 5.95 million on federal Pandemic Unemployment Assistance and 5.27 million on Pandemic Emergency Unemployment Compensation, another federal program. The remainder are on an array of unemployment insurance programs that newly discharged veterans, federal employees and state workers are receiving.
It is likely that investors will continue to emphasize the top-line number as an indicator of improvement in the economy and the overall labor market.
But we anticipate that policymakers may give increased emphasis on the total number of people on some form of unemployment insurance as a better measure of the depth and breadth of the labor market to account for non-traditional workers and those employed in the gig economy.
Before the pandemic, those workers did not qualify for unemployment insurance, and in our estimation this captures the broader labor market in an ever-changing structure of work in the United States.
Capital goods orders and shipments remain robust
In other economic data released Thursday, durable goods orders advanced by 2.3% in May, with capital goods orders rising by 4.2%. On a three-month average annualized pace, non-defense orders of capital goods ex-aircraft, which is a proxy for forward-looking capital expenditures, rose by 14.9% on the month. Shipments of those same goods, which is a proxy for current-quarter capital goods, increased by 0.7% on the month and by 10.75% on a three-month average annualized pace.
Both indicators remain robust, indicating that the expected burst of capital investment to improve productivity that we anticipate will be one of the major drivers of growth.
Final estimate of first-quarter GDP unchanged
Real American gross domestic product through the first three months of the year remained unchanged at 6.4%. Alternative metrics of growth inside the data point to a slightly faster pace of growth, with gross domestic income advancing at a 7.6% pace, real final sales by 9.2%, gross domestic purchases by 7.7%, and final sales to domestic purchasers by 10.5%. Final sales to private domestic purchasers increased by 11.5%.
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased by $55.2 billion in the first quarter, in contrast to a decrease of $31.4 billion in the fourth quarter.
Profits of domestic financial corporations decreased by $6.4 billion in the first quarter, in contrast to an increase of $17.5 billion in the fourth quarter. Profits of domestic nonfinancial corporations increased by $72.1 billion, in contrast to a decrease of $48.2 billion in the fourth quarter. Rest-of-the-world profits decreased by $10.6 billion, compared with a decrease of $0.7 billion in the previous quarter. In the first quarter, receipts increased by $34.2 billion, and payments increased by $44.8 billion.
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