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Jobless Claims Rise Slightly, Remain at Low Levels

The report does little to suggest the job market has cooled off.

Jobless Claims Rise Slightly

A "Now Hiring" sign is displayed on a shopfront, Aug. 5, 2022, in New York City.( John Smith/VIEWpress/Getty Images)

The number of Americans filing first-time claims for unemployment benefits rose slightly last week, the Labor Department reported on Thursday.

The number, 213,000, was 5,000 above the prior week’s revised 208,000, which had been originally estimated at 213,000. The four-week moving average was 216,750, down 6,000 from the previous period.

Overall, the report does little to alter the fact that the labor market remains very strong.

Despite a slowing economy, Federal Reserve Chairman Jerome Powell described the job market as 'out of balance' on Wednesday when he explained the central bank’s decision to raise interest rates by 75 basis points.

Political Cartoons on the Economy

The Fed is forecasting another series of interest rate hikes before it pauses to assess the state of the economy. In its updated economic forecast Wednesday, the Fed sharply cut its estimate of the growth in gross domestic product for this year to 0.2%. Powell and his colleagues are acting aggressively to thwart inflation, and the primary tool is to raise interest rates even at the expense of the economy.

“We expect the Federal Reserve to pause its rate hikes in early 2023, as the inflation narrative will eventually calm down,” said David Bahnsen, chief investment officer, The Bahnsen Group. “Trucking prices, gasoline, manufacturing, used cars, residential rent, and shipping costs are all going down. The sticky part of our current inflationary moment is food and when food prices roll over, the entire inflation narrative changes, but not before.”

Many analysts now say it is inevitable the economy will tumble into a recession, possibly before the year ends, dashing hopes for the “soft landing” favored by the Fed. But the labor market has yet to concede, with strong monthly hiring numbers and just under two jobs currently available for those looking for work.

“Prior to the September Fed meeting, the Fed had been looking for slower core inflation, lower commodity prices, an end to runaway house price and rent growth, and slower wage growth to be convinced that inflation was moving convincingly toward their 2% target,” said Bill Adams, chief economist at Comerica Bank.

“Now their bar is even higher: They want to see the unemployment rate move meaningfully higher to cool the labor market, slow the trend in wage growth, and bring inflation expectations to heel,” Adams added. “They would rather over tighten and cause a recession than under-tighten and see inflation re-emerge down the line.”

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