Jobless claims fall again as labor market remains hot
Zachary Halaschak
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Jobless claims have fallen for another week, once again defying expectations and showing that the labor market has remained insulated from rising interest rates.
The number of new applications for unemployment benefits fell by 2,000 to 190,000 last week, the Labor Department reported Thursday.
Falling jobless claims are a sign the labor market is remaining resilient despite the Federal Reserve’s historic effort to tighten monetary policy to slow economywide spending and drive down inflation.
The weekly jobless claims number has been closely watched over the past year, given the Federal Reserve has raised interest rates several times in the past year, including a few massive hikes, to drive down inflation, which is running at 6.4%, according to the consumer price index.
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“The jobless claims data continue to tell the same story: The labor market is too tight to help the Fed in its effort to lower inflation and the data leave the Fed on track to raise interest rates at the next three meetings,” said economists from Oxford Economics. “Initial jobless claims continue to be subdued as layoffs economywide remain low, and the layoffs we do see in some sectors have yet to translate into a rise in new jobless claims.”
Rate hikes naturally depress economic activity and thus are expected to lead to job loss, although the labor market has been surprisingly resilient.
The economy gained 517,000 jobs in January, shattering the expectations of most economists. The unemployment rate is now at 3.4% and is the lowest since 1969.
While the number of new jobless claims has remained low enough to avert fear that the country is currently in a recession, many economists anticipate that the U.S. economy will enter a recession because of the aggressive rate-hiking at some point this year. That is because rate hikes can take a while to filter through the broader economy and create recessionary conditions and job losses.
It is expected that as the rate hikes start to ripple across the economy, jobless claims begin to tick up, and then monthly jobs reports will begin to turn negative.
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A recently released survey of four dozen of the country’s leading business economists, which was conducted by the National Association for Business Economics last month, found that 58% of participants predict a recession coming in the next 12 months.