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ABC News reported in late July that U.S. filings for unemployment rose again, settling at a higher level than the Federal Reserve was hoping for.
“Jobless claims for the week ending July 13 rose by 20,000 to 243,000 from 223,000 the previous week,” the outlet reported, citing Labor Department data. “It’s the eighth straight week claims came in above 220,000. Before that stretch, claims had been below that number in all but three weeks so far in 2024.”
Did you know that weekly unemployment claims are considered representative of layoffs?
“The Fed asked to see more evidence of a cooling economy, and for the most part, they’ve gotten it,” says E-Trade director Chris Larkin. “Add today’s weekly jobless claims to the list of rate-cut-friendly data points.” (TAKE A POLL: Is Your Financial Stability Being Affected By Our Economy?)
The Fed was hoping to cool off the labor market in order to slow wage growth, which they claim is one of the causes of inflation. The Fed has raised its benchmark borrowing rate 11 times since March 2022 to try and quell the four-decade high inflation rates post-COVID-19 policy mismanagement.
Are we avoiding a recession?
ABC News says that we’re avoiding a recession right now because of high consumer demand and a somewhat resilient labor market despite the growth in jobless claims. The hope is that inflation will continue to ease, but there is no telling how this will play out in the wider market and impact daily life.
Unemployment somehow went up to 4.1% in June despite American employers adding more than 200,000 jobs. Could it be that people are taking on more jobs to support their families during this financial crisis?
What do the Heavy Hitters Say?
Vanguard, widely acknowledged as one of the top three organizations in the world next to State Street and BlackRock said in July that “labor market indicator that has reliably signaled the start of a recession could appear in coming months.” (TAKE A POLL: Is it Okay For Religious Symbols to be in Public Spaces?)
“The Sahm rule (named after the former Federal Reserve economist who identified it) is triggered when the unemployment rate spikes, with its three-month moving average jumping half a percentage point above its 12-month through. A 4.2% unemployment rate in the July jobs report, scheduled to be released on August 2, would do the trick. Would that mean a U.S. recession had started? Very doubtful, said Adam Schickling, a Vanguard senior economist who studies the labor market.”
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