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US Unemployment Rate Drops - 2003-07-24

The U.S. Labor Department is reporting a sharp drop in the number of Americans filing for unemployment benefits. It has been called a "jobless recovery." Although the U.S. economy has been growing at a sluggish pace for nearly two years, the number of Americans unable to find work has remained stubbornly high.

That trend may finally be reversing itself. The Labor Department reports new applications for unemployment benefits dropped by 29,000 to 386,000 for the week ending July 19. It was the second consecutive week in which the number fell and the first time since February that new claims dipped below 400,000, a level generally associated with a weak labor market.

Economist Kevin Hassett of the American Enterprise Institute says the unemployment numbers offer hope that the U.S. economic recovery is strengthening.

"It is really, really good news," he said. "When claims are below 400,000 or so, it is a sign that the economy is starting to pick up. This is a sign that employers are starting to hire people again and keep their own folks.

"So one would expect that employment will be going up if initial claims [for unemployment benefits] are going down," he continued. "And that is a good sign for the economy and for workers."

Even so, Mr. Hassett cautions that unemployment claims often swing widely in the month of July, distorted by temporary plant closings and other factors. He says he will need to see several more weeks of declines before he can definitively say that better times lie ahead for job seekers.