Initial unemployment claims hit 52-year-low, GDP growth slows in Q3

According to reports released Wednesday by the Labor and Commerce Departments, initial unemployment claims fell to their lowest level since 1969 last week, and the country’s Gross Domestic Product (GDP) growth cut sharply in the third quarter. That slowdown resulted in the lowest growth rate in over a year.

“Real GDP increased at an annual rate of 2.1 percent in the third quarter of 2021, according to the ‘second’ estimate released by the Bureau of Economic Analysis,” the Commerce Department said in its report. “The GDP estimate released today is based on more complete source data than were available for the ‘advance’ estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent.”

GDP had been growing at a steadily increasing rate over the last three quarters, coming in at 4.5%, 6.3%, and 6.7% in Q4 of 2020, Q1 and Q2 respectively. Those numbers followed a massive 33.8% increase in GDP in Q3 of 2020, when the country was recovering from a 31.2% decrease in GDP in the early days of the pandemic.

In addition to the Commerce Department’s report on GDP growth, the Labor Department reported Wednesday initial unemployment claims dropped by 71,000 to 199,000 last week.

“This is the lowest level for initial claims since November 15, 1969 when it was 197,000,” the Labor Department said in its report. The department also reported, “the 4-week moving average was 252,250, a decrease of 21,000 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500.”

Not only were last week’s initial claim numbers historic, but they also fell below their pre-pandemic level of around 220,000 a week for the first time since the pandemic began. Initial claims have been falling steadily since topping 900,000 in early January.

However, it appears seasonal adjustments around the Thanksgiving holiday contributed significantly to the number of initial claims. When unadjusted, claims actually ticked up by more than 18,000 to nearly 259,000.

“Overall, expect continued volatility in the headline figures, but the trend remains very slowly lower,” financial consultant company Contingent Macro Advisors wrote in a research note.