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Economic Roundup: Jobless Claims and Refinancings

Are we any closer to an economic recovery?
(Watchara Ritjan)
(Watchara Ritjan)
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“Worker filings for unemployment benefits dropped to 712,000 last week, nearing their lowest level since the pandemic fueled a surge in layoffs last March,” WSJ writes.

Why It Matters: Jobless claims have fallen pretty noticeably in the last few weeks, and “last week’s seasonally adjusted total was about 200,000 below an early January peak.” It’s hard to say — things are a bit unclear — and the ongoing impact of Covid-19 still weighs heavy, but we could be on a path to a return here.

  • The lowest weekly jobless claims mark, since the pandemic started, was 711,000 in November.
  • In 2019, the weekly average was roughly 218,000 and the pre-pandemic high was 695,000.

Other Details Suggesting Recovery:

  1. We saw employers add 379,000 jobs in February.
  2. Government stimulus boosted household income and spending to start the year, and there looks to be more on the way.
  3. “According to the jobs site Indeed, the number of job postings on March 5 was 6.7% above their pre-pandemic level.”

“Americans extracted more cash from their homes through cash-out refinancings in 2020 than in any year since the financial crisis,” WSJ writes.

The Details:

  1. In 2020, U.S. homeowners grabbed around $153 billion in home equity. It’s a 42% improvement from 2019 and the most since 2007, according to Freddie Mac.
  2. Lenders churned out a record number of mortgages in 2020, “fueled by about $2.8 trillion in refis, according to mortgage data firm Black Knight Inc.”

Why It Matters: Whether it was cushioning themselves against tumultuous economic conditions or building/redecorating, consumers cashed in the opportunity in waves. Home prices generally tend to fall during recessions, but Covid-19 has had the opposite effect. They’re booming.
The Outlook: The average rate on a 30-year fixed mortgage dropped below 3% for the first time in 2020, making refinancing appealing. But those rates are already starting to tick back up, so we have to watch closely where it goes.

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