The number of Americans filing new claims for unemployment benefits fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January. Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended Jan. 13, the lowest level since September 2022, the Labor Department said on Thursday.
Quick Read
- Decline in Unemployment Claims: The number of Americans filing for unemployment benefits last week dropped to 187,000, the lowest since September 2022.
- Stable Labor Market: This decrease indicates a strong labor market, showing resilience despite the Federal Reserve’s elevated interest rates aimed at cooling the economy.
- Four-Week Average: The four-week average for unemployment claims, which offers a more stable measure, also decreased to 203,250, reaching its lowest in almost a year.
- Continued Benefit Claims: About 1.81 million Americans were receiving unemployment benefits in the week ending January 6, showing a drop of 26,000 from the week before.
- Economic Indicators: Weekly jobless claims are considered a key indicator of U.S. layoffs. The current low levels suggest limited layoffs despite economic pressures like high interest rates and inflation.
- Federal Reserve’s Interest Rate Hikes: Since March 2022, the Fed has raised its benchmark interest rate 11 times to combat the high inflation following the COVID-19 recession.
- Inflation Trends: Inflation has shown signs of easing, with a 0.3% rise from November and a 3.4% increase from the previous year, indicating ongoing efforts to reach the Fed’s 2% inflation target.
- Economic Predictions: Despite aggressive rate hikes in 2022, the U.S. economy and job market have shown unexpected resilience, avoiding a predicted recession. The unemployment rate has consistently been below 4% for 23 months, the longest streak since the 1960s.
- “Soft Landing” Scenario: The combination of slowing inflation and low unemployment rates fuels optimism for a “soft landing,” where the Fed’s rate increases effectively control inflation without triggering a recession.
The Associated Press has the story:
US applications for jobless benefits fall to lowest level since September 2022
Newslooks- (AP)
The number of Americans applying for unemployment benefits last week fell to its lowest level in more than a year, underscoring the resilience of the labor market despite elevated interest rates that are intended to cool the economy.
Jobless claim applications fell to 187,000 for the week ending Jan. 13, a decrease of 16,000 from the previous week, the Labor Department reported Thursday. That’s the fewest since September of 2022.
The four-week average of claims, a less volatile reading, fell by 4,750 to 203,250. That’s the lowest four-week average in almost a year.
Overall, 1.81 million Americans were collecting jobless benefits during the week that ended Jan. 6, a decline of 26,000 from the previous week.
Weekly unemployment claims are viewed as representative for the number of U.S. layoffs in a given week. They have remained at extraordinarily low levels despite high interest rates and elevated inflation.
In an effort to stomp out the four-decade high inflation that took hold after an unusually strong economic rebound from the COVID-19 recession of 2020, the Federal Reserve raised its benchmark rate 11 times since March of 2022.
Though inflation has eased considerably in the past year, the Labor Department reported last week that overall prices rose 0.3% from November and 3.4% from 12 months earlier, a sign that the Fed’s drive to slow inflation to its 2% target will likely remain a bumpy one.
The Fed has left rates alone at its last three meetings and most economists are forecasting multiple rate cuts this year.
As the Fed rapidly jacked up rates in 2022, most analysts predicted that the U.S. economy would tip into recession. But the economy and the job market remained surprisingly resilient, with the unemployment rate staying below 4% for 23 straight months, the longest such streak since the 1960s.
The combination of decelerating inflation and low unemployment has raised hopes that the Fed is managing a so-called soft landing: raising rates just enough to bring down prices without causing a recession.
