The U.S. Bureau of Labor Statistics has reported that the average number of weekly unemployment aid applications fell last week reaching a new five-year low. Applications dropped by 10,000 to 332,000 after seasonal adjustment, bringing down the four-week average to 346,750. Layoffs have also decreased nearly 13 percent since November as net hiring has increased.
From November to February, employers have added an average of 200,000 jobs per month, up considerably from the approximately 150,000 jobs per month added during the previous four months. At the same time, the unemployment rate has fallen to its current 7.7 percent rate, down from 7.9 percent in January. Despite the continued improvement, about 5.6 million people continued to receive unemployment benefits in the week ending February 23, up 220,000 from the previous week.
The sunnier job market suggests that employers aren’t yet too spooked over higher taxes and mandated government spending cuts. Social Security taxes rose 2 percent in January as $44 billion in general government spending cuts started on March 1. However, rising taxes has not stalled the American consumer as retail sales climbed to a five-month high in February. Even excluding categories such as gas and cars (which are predictably volatile and currently high), retail sales still performed well.
Auto and housing sales continue to signal a quickening economic recovery. In January, sales of new houses jumped 16 percent while house prices rose at a rate faster than any recorded in over six years. Economist are encouraged overall with many revising their predictions to afford for a significantly faster growth rate during Q1 2013.