The number of Americans filing for jobless benefits reached its highest level in 11 weeks, although layoffs continue to remain historically low, according to the Labor Department’s report on Thursday.
Jobless Claims Increase
For the week ending Jan. 27, applications for unemployment benefits rose to 224,000, marking a 9,000 increase from the previous week.
The four-week average of claims, which is a less volatile measure, also saw a rise of 5,250 to 207,750.
Unemployment Claims as a Proxy
Weekly unemployment claims are often seen as an indicator of the number of layoffs in the United States during a given week. Despite efforts by the U.S. Federal Reserve to cool down the economy, these claims have remained at exceptionally low levels.
Fed’s Efforts to Curb Inflation
In an attempt to combat the four-decade high inflation that occurred after a strong economic rebound from the COVID-19 recession in 2020, the Federal Reserve increased its benchmark rate 11 times starting in March 2022.
Although inflation has significantly eased over the past year, the Labor Department recently reported a 0.3 percent increase in overall prices from November to December. Prices were also up 3.4 percent compared to the previous year. This suggests that the Fed’s goal of slowing inflation to its 2 percent target may face challenges.
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The Federal Reserve has maintained its rates in its last four meetings.
Economy Remains Resilient
Despite predictions that the U.S. economy would enter a recession as the Federal Reserve rapidly increased rates in 2022, the economy and job market have shown surprising resilience. The unemployment rate has stayed below 4 percent for 23 consecutive months, marking the longest streak since the 1960s.
The government will release its January jobs report on Friday.
Increase in Job Cuts
While layoffs remain at low levels, there has been a recent uptick in job cuts across the technology and media sectors. Companies such as Google’s parent company Alphabet, eBay, TikTok, and the Los Angeles Times have all announced layoffs.
In addition to tech and media, UPS, Macy’s, and Levi’s have also recently reduced their workforce.
Overall, 1.9 million Americans were receiving jobless benefits during the week ending Jan. 20, which is an increase of 70,000 from the previous week. This is the highest number since mid-November.
By Matt Ott
