Bidenomics: Weekly Unemployment Claims Rise to Highest Level in a Year
The recent data from the U.S. Department of Labor indicates a notable increase in unemployment claims, with figures for the week ending July 27 rising by 14,000 to 249,000. This marks the highest level in a year and the tenth consecutive week that claims have surpassed 220,000. Weekly unemployment claims serve as a barometer for layoffs, and while they have risen slightly, they remain historically low.
In the midst of this, the U.S. labor market is under scrutiny as consumer demand remains robust, helping to mitigate recession fears despite ongoing rate hikes by the Federal Reserve since March 2022. The Federal Reserve has been aiming for a “soft landing,” managing inflation without triggering a recession or significant layoffs. They have hinted that interest rate cuts may be on the horizon if economic conditions continue to show signs of weakening.
The unemployment rate increased slightly to 4.1% in June, despite 206,000 new jobs being added, a contrasting signal against the backdrop of falling job openings and rising continuing unemployment claims. The total of Americans receiving unemployment benefits also rose, suggesting mounting challenges in job placements across various sectors. The situation is shifting, with expectations that the Fed might lower rates in the upcoming month as more analysts predict a potential decline based on the current economic indicators.
The number of Americans filing for unemployment benefits jumped to its highest level in a year last week.
Jobless claims for the week ending July 27 climbed by 14,000 to 249,000, from 235,000 the previous week, the Labor Department reported Thursday.
It’s the most since the first week of August last year and the 10th straight week that claims have come in above 220,000. Before that stretch, claims had remained below that level in all but three weeks this year.
Weekly unemployment claims are widely considered as representative of layoffs, and though they have been slightly higher the past couple of months, they remain at historically healthy levels.
Strong consumer demand and a resilient labor market has helped to avert a recession that many economists forecast during the extended flurry of rate hikes by the Federal Reserve that began in March of 2022.
As inflation continues its current trajectory, the Fed’s goal of a soft-landing — bringing down inflation without causing a recession and mass layoffs — appears within reach.
On Wednesday, the Fed left its benchmark rate alone, but officials hinted strongly that a cut could come in September if the data remained on its recent trajectory.
And recent data from the labor market suggest some weakening.
The unemployment rate ticked up to 4.1 percent in June, despite the fact that America’s employers added 206,000 jobs.
U.S. job openings also fell slightly last month.
Add that to elevated layoffs and the Fed could be poised to cut interest rates next month, as most analysts expect.
The four-week average of claims, which smooths out some of the weekly ups and downs, rose by 2,500 to 238,000.
The total number of Americans collecting unemployment benefits for the week of July 20 jumped by 33,000 to 1.88 million.
The four-week average for continuing claims rose to 1,857,000, the most since December of 2021.
Continuing claims have been on the rise in recent months, suggesting that some Americans receiving unemployment benefits are finding it more challenging to land jobs.
There have been job cuts across a range of sectors this year, from the agricultural manufacturer Deere, to media outlets like CNN, and elsewhere.
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