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Saturday, May 18, 2024

U.S. Weekly Jobless Claims Fall Slightly, Continuing Claims Rise

Key Takeaways:

  • Initial jobless claims came in at 211,000 for the week ending April 6th.
  • Today’s jobless claims report suggests that the labor market is still historically tight, but may be gradually loosening at the margins.

Jobless Claims Report

The number of Americans filing new claims for unemployment benefits edged down last week, while the total number on unemployment rolls increased, painting a mixed picture of the labor market.

Initial jobless claims came in at 211,000 for the week ending April 6th, the Labor Department reported Thursday. That was down from 222,000 the previous week and below consensus forecasts of 215,000. The 4-week moving average of initial claims, which smooths out week-to-week volatility, dipped to 214,250.

However, continuing claims, which represent the total number of Americans on state unemployment benefits, rose to a seasonally adjusted 1.817 million for the week ending March 30th. That was up from 1.789 million the prior week and above expectations for 1.792 million continuing claims. The uptick suggests it may be taking longer for some unemployed workers to find new jobs.

Inflation Data to the Mix

The latest claims figures come after higher-than-expected inflation data earlier this week. The Consumer Price Index (CPI) rose 0.4% in March and was up 3.5% from a year ago, still well above the Federal Reserve’s 2% target. Core CPI, which excludes volatile food and energy prices, also increased 0.4% last month.

The hotter inflation readings sparked a sell-off in stocks and a rally in the U.S. dollar, as investors bet that the Fed will need to keep raising interest rates to cool price pressures. The S&P 500 index fell nearly 1% on the inflation news, while the dollar index jumped over 1%. However, as of 4/11/2024, the S&P500 jumped back up nearly 1% on Thursday.

S&P 500 1-Minute Price Data 4/11/2024

In recent speeches, Fed officials have emphasized that they remain committed to bringing inflation down and are carefully watching incoming economic data to guide their policy decisions. Governor Michelle Bowman noted several upside inflation risks last week, including geopolitical developments, fiscal stimulus, housing shortages, and the potential for inflation to prove stickier than expected.

Fed Chair Jerome Powell had a similar tone earlier this month, cautioning against cutting rates too soon, which could cause inflation to rebound. Markets are currently pricing in a peak fed funds rate of around 5.5% by mid-year.

The Labor Market is Still Tight

Today’s jobless claims report suggests that the labor market is still historically tight, but may be gradually loosening at the margins. Continued weekly claims above 200,000 would mark a shift from the exceptionally low levels seen in 2022. However, claims remain well below the pre-pandemic average of around 220,000 per week, indicating that layoffs are still quite low by historical standards.

With inflation proving persistent and the job market resilient, the Fed appears to have more work ahead in cooling the economy to a more sustainable pace. While policymakers want to avoid tipping the economy into a recession, they seem increasingly willing to risk a modest rise in unemployment in order to prevent a 1970s-style inflationary spiral. All eyes will be on the next round of jobs and inflation data for further clues on the likely path of interest rates.

Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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