Lower Unemployment Claims Belie Recession Fears

Although economists are concerned about a looming recession and tech firms are making the news almost every day with layoff announcements, recent data shows that the nation’s jobs market is still quite robust.

Key takeaways

The U.S. Department of Labor released its latest statistics, which signal that employment opportunities have not dried up across the labor market despite the ongoing economic downturn.

Here are a few of the encouraging signs included in the report:

• Jobless claims dropped from 226,000 to 222,000 over the course of a week.
• Americans collecting unemployment benefits ticked up slightly, but not to a troubling level.
• Unemployment applications are still at historic lows despite the Federal Reserve’s inflation-fighting efforts.
• Last month, U.S. employers added 261,000 new jobs.

All in all, American workers appear to be in a pretty good position — aside from the tech industry — as the unemployment rate remains well below 4%.

It’s not all good news

Although strong employment numbers might represent good news on the surface, they are also stymying the Fed’s effort to bring down consumer costs. The central bank has repeatedly raised interest rates in a bid to cool demand and bring inflation back down to a manageable level.

While the inflation rate has been on a modest decline in recent months, economists believe that unemployment will have to increase in order to achieve the desired result. Since that obviously isn’t happening quickly, we might be stuck with elevated prices on almost everything we buy for a while longer.

If the Fed continues to hike interest rates, the cost of borrowing money will also continue to increase, thus making things even more expensive.

Chris Agee November 18th, 2022

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