WASHINGTON, July 23 (Xinhua) -- Initial jobless claims in the United States rose to 419,000 last week, indicating a bumpy recovery amid the recent COVID-19 surge, the U.S. Labor Department reported Thursday.

In the week ending July 17, the number of Americans filing for unemployment benefits increased by 51,000 from the previous week's upwardly revised level of 368,000, according to a report released by the department's Bureau of Labor Statistics.

The latest data came after initial jobless claims in the previous week dropped to the lowest level since March 14, 2020, when it was 256,000, the report showed.

The four-week moving average, a method to iron out data volatility, edged up by 750 to 385,250.

The weekly jobless claims report was released as COVID-19 cases, hospitalizations and deaths went up drastically in recent weeks, with the highly contagious Delta variant spreading across the country.

The latest report also showed that the number of people continuing to collect regular state unemployment benefits in the week ending July 10 decreased by 29,000 to 3.2 million. That number peaked in April and May last year, when it was over 20 million.

Meanwhile, the total number of people claiming benefits in all programs -- state and federal combined -- for the week ending July 3 also decreased by 1.26 million to 12.57 million, as the country continues to grapple with the fallout of the pandemic.

The noticeable decline came weeks after over 20 states, nearly all of which are Republican-led, had announced plans to end the 300-U.S.-dollar weekly federal unemployment benefits ahead of their expiration date of Sept. 6.

These states argued that federal supplement to unemployment benefits discouraged workers from returning to work and led to labor shortage.

At a virtual news conference in mid-June, Federal Reserve Chair Jerome Powell, however, cited federal supplements to unemployment insurance as a less important factor that seems likely to be "holding back labor supply."

Other key factors include: finding a new job, which is a process that takes longer as workers match their skills to what employers want; fear of returning to work, which should "diminish" as vaccinations move ahead; lingering childcare needs, according to Powell.

Economists have said that U.S. economic growth is expected to start slowing in the third quarter amid supply constraints and inflation worries, after reaching its peak in the second quarter of the year.

Ethan Harris, head of global economics research at Bank of America Merrill Lynch Global Research, recently trimmed his forecast for U.S. gross domestic product (GDP) growth in 2021 to 6.5 percent, down from the 7 percent previously estimated, as the economy seems to be "more constrained" than anticipated.

Harris noted that this is showing up in two ways: restraint on goods production from supply-chain issues and limitations on services spending resulting from labor shortages.

The University of Michigan said last week that its preliminary consumer sentiment index fell to 80.8 in July from a final reading of 85.5 in June, marking the lowest level since February.

Tim Quinlan and Sara Cotsakis, economists at Wells Fargo Securities, argued in an analysis Thursday that a key factor in the "wilting" confidence was inflation worries, which by some measures are "flashing red" in a way they have not in a generation.

Surging demand against a backdrop of scarce resources and a lack of skilled labor in some industries have ushered in a degree of inflation that many younger consumers "have never experienced," according to Quinlan and Cotsakis.

They also noted that massive cash savings, faster income growth and generous tax credits should help consumers keep pace on a micro level, but "all that excess cash may contribute to the inflation problem on a macro level."

"Inflation poses a tangible threat to a consumer-driven post-pandemic recovery," they said.