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Continued improvement in labor market conditions

First-time claims for unemployment rose somewhat last week, but given the volatile nature of this series and the vagaries of seasonal adjustments—especially around this time of the year when layoffs are typically the highest—it's difficult to conclude that anything is amiss. The broader trend towards reduced layoff activity remains in place. In the third chart above, I note that the percent of the labor force receiving some form of unemployment compensation fell by almost 30% (from 7% to 5%) over the course of the last year.

Though unemployment is still quite high, these charts highlight some significant change on the margin. They also reflect increased hiring activity and increased incentives for the unemployed to seek and/or accept employment. Congress has been much more generous in handing out unemployment insurance this time around than ever before; while this is good from a humanitarian perspective, it undoubtedly has contributed to prolonging high rates unemployment by delaying the adjustments necessary to shift labor from shrinking sectors of the economy (e.g., housing-related industries) to the growing sectors (e.g., mining, technology, and manufacturing).

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