Economic Report: Unemployment claims fall below 400,000 for the first time during the pandemic

The numbers: Coronavirus cases are falling fast and so are the number of people losing jobs: New applications for regular unemployment benefits fell below 400,000 in late May for the first time since the early days of the coronavirus pandemic.

Initial jobless claims dropped by 20,000 to 385,000 in the week ended May 29, the government said Thursday. It was the fifth decline in a row.

Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would slip to a seasonally adjusted 393,000.

The number of people applying for benefits has fallen by more than half since January to coincide with a surge in vaccinations and a steep decline in coronavirus cases.

New unemployment claims are still almost twice as high as they were before the pandemic, however. New applications had been running in the low 200,000s before the viral outbreak in early 2020.

Read: Why aren’t Americans happier about the economy? They are paying higher prices for almost everything

Big picture: The fading pandemic has allowed most businesses to fully reopen, giving another boost to a U.S. economic recovery that had been turbocharged by massive federal stimulus payments.

One of the biggest problems many companies face right now is filling a record number of open jobs to meet a surge in pentup demand as Americans get out and about again. An acute labor shortage, in turn, has made firms very reluctant to let go of any workers.

Read: Hiring signs are everywhere, but Wall Street isn’t betting on huge job gains in May

Nearly half of the states plan to cut off a $300 federal unemployment stipend owing to complaints the emergency benefits are discouraging people from taking jobs. It won’t be known until late June or early July if reduced benefits induce more people to find work.

Read: U.S. inflation hasn’t been this high since 2008

Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting. Widespread fraud has also resulted in tens of billions of dollars in improper payments, a Labor Department review estimated.

Market reaction: The Dow Jones Industrial Average

and S&P 500

were set to open lower in Thursday trades.

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