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How decreasing jobless claims impact economic growth

Fewer jobless claims usually indicate positive signs for the economy. The Department of Labor's Bureau of Labor Statistics released news last week, showing that jobless claims dropped by 14,000 applications to 289,000 in the week ending August 2.

This was lower than the number experts anticipated of at least 300,000 applications. Comparing this figure to last year's, Wall St. Cheat Sheet reports that 335,000 Americans filed jobless claims at this time last year. 

In addition, July saw continued job growth. Employers added 209,000 jobs, making it the sixth consecutive month to exceed job growth of 200,000. What does this mean in terms of economic growth?

First, it suggests that emerging unemployment is decreasing and returning to more normal levels. Fewer Americans are being laid off, even as long-term unemployment remains high. 

Wall St. Cheat Sheet also explains that jobless claims typically "wane before employment growth can accelerate." 

However, the source emphasizes that decreasing jobless claims have not automatically led to a spike in hiring: "Of course, initial applications for unemployment benefits have been trending down for more than a year, but hiring gains have been far less consistent."

In addition to the Department of Labor's report, Gallup's U.S. Job Creation Index offered additional positive findings. It found — for the first time since 2008 — that a plurality of American workers believed their employers were hiring at a greater rate than cutting or maintaining staff.

While July's plus 28 rating was not much higher than early 2008's plus 26, the Gallup Report suggested that this still suggested positive trends. It may help "buoy workers' economic confidence," and have a positive effect on the overall economy.