U.S. Unemployment Hits 27-Year Low

The number of U.S. workers filing first-time claims for state unemployment insurance benefits fell to the lowest level in 27 years in the latest week, suggesting the U.S. labor market remains as tight as ever. New claims for state unemployment insurance benefits fell 9,000 to 257,000 during the week ended Apr. 15, the lowest level since the week ended Dec. 1, 1973, the Labor Dept. said. The four-week moving average of claims, which attempts to smooth out some of the week-to-week volatility, fell 1,500 to 262,500, the lowest level since the week ended Dec. 15, 1973. The level of new jobless claims in the latest week was well below the 265,000 expected by economists and suggests the labor market will tighten further before any slack appears. "What the jobless claims data are telling us is that the unemployment rate is most likely heading below 4% sometime in the course of the second quarter," says Jeffrey Palma, an economist at Warburg Dillon Read. The U.S. unemployment rate averaged 4.1% in March, after hitting a 30-year low in January. Palma says that the jobless rate could fall as low as 3.9% in April. Federal Reserve Chairman Alan Greenspan has argued that the shrinking pool of available workers in the U.S. will inevitably result in higher inflation if the rate of economic growth does not slow. The Fed has already raised interest rates five times since June 1999 in an effort to slow the economy, and is widely expected to raise rates again when its policy committee meets on May 16.