Jobless claims rise as the Fed eyes another rate hike next week
by Zachary Halaschak, Economics Reporter |
December 08, 2022 08:32 AM
The number of new applications for unemployment benefits rose by 4,000 to 230,000 last week, a discouraging sign for the economy, the Labor Department reported Thursday.
This week’s jobless claims number is being closely watched as it is the last such report before the Federal Reserve votes on raising rates next week.
Rising jobless claims, a proxy for layoffs, are a sign the unusually strong labor market might be starting to react to the central bank’s efforts to tighten monetary policy to slow economywide spending and bring down inflation.
For a long stretch toward the end of the summer, jobless claims defied expectations and remained low — despite the Federal Reserve’s aggressive and historic rate hikes. Since the start of October, though, they have been above 210,000.
The Fed has been aggressively jacking up interest rates to tame inflation, but the trade-off is that rising interest rates slow demand and can result in a recession.
Last month, the central bank conducted another huge three-quarters of a percentage point, or 75 basis points, rate increase. It was the fourth such increase in just five months — the largest increase in four decades.
Fed Chairman Jerome Powell has made it clear the Fed won’t let up with tightening until inflation starts returning to its preferred 2% rate, although recent comments indicate the pace of the tightening will begin to slow.
more
https://www.washingtonexaminer.com/policy/economy/jobless-claims-rise-as-the-fed-eyes-another-rate-hike-next-week
