Jobless claims rise after weeks of declines
by Zachary Halaschak, Economics Reporter |
October 06, 2022 08:31 AM
The number of new applications for unemployment benefits rose by 29,000 to 219,000 last week, the Labor Department reported Thursday, bucking the recent trend of general declines.
Rising jobless claims, a proxy for layoffs, are a sign the economy and job market might be starting to slow in reaction to the Federal Reserve’s efforts to tighten monetary policy to limit economywide spending and bring down inflation.
Jobless claims generally declined in August and September, despite interest rates rising and economic forecasters largely betting that claims would begin to tick upward. Claims had declined in six of the past seven weeks, bucking expectations of the labor market.
Thursday’s number of new claims for unemployment isn’t near where it was during most of the pandemic and is not at a rate that would suggest an imminent recession.
Rising jobless claims would be one clue that the tight labor market may be slowing in response to the Fed aggressively jacking up interest rates. Driving up interest rates slows demand and can result in recessionary conditions.
The Fed has been on a historic rate hiking kick. Last month, the central bank conducted a monster rate hike to the tune of three-quarters of a percentage point, or 75 basis points. It was the third such increase in just four months.
Even despite the rate hikes, the labor market has shown resiliency. The economy added 315,000 jobs in August, and the unemployment rate ticked up slightly to 3.7%, near a five-decade low and around the ultralow level it was at right before the pandemic.
Still, Fed Chairman Jerome Powell has warned that the tight labor market isn’t likely to last and that there will be some economic “pain” as higher rates begin to cut into the country’s economic growth and jobs.
All eyes are on Friday’s much-anticipated release of the September employment report. Consensus expectations are that it will show job growth slowed to 250,000 last month.
A weaker-than-anticipated reading will likely cause investors to fear that a recession is finally beginning to take hold, while a stronger-than-expected reading will be good news for the economy and give the Fed more ammo in its mission to hike rates to rein in inflation.
https://www.washingtonexaminer.com/policy/economy/jobless-claim-rise-after-weeks-of-declines
