Applications for unemployment benefits rose by 27,000 to 229,000 for the week ending June 4, sending an ominous message on the state of our economy. All eyes are on the strength of the job market as the federal reserve considers another hike in interest rates next week. Click below to see how these numbers may signal an even deeper recession on the rise.
Tim Smart; June 9, 2022
The number of people filing first-time claims for unemployment rose last week to 229,000, the Labor Department reported on Thursday.
That compares with a revised 202,000 the prior week.
The four-week moving average was 215,000, an increase of 8,000 from the prior period.
The strength of the job market is something the Federal Reserve will be watching as it considers another hike in interest rates next week. The central bank raised rates by 50 basis points in May and is expected to do the same at its June meeting. At the same time, it is beginning to reduce its holdings of Treasurys and other securities.
Both are aimed at curbing consumer inflation now running at 8.3% annually. The government will release the latest reading on the consumer price index Friday.
For much of the coronavirus, the Fed focused on keeping the job market healthy, but it now acknowledges it may have let the economy run too hot and was late in starting to address runaway inflation. The war in Ukraine only added to inflation as it has disrupted worldwide energy supplies and driven up the costs of many energy-related goods.
“Monthly core CPI inflation will likely remain strong at 0.6% (month over month), including still-strong rent inflation; a rebound in used vehicle prices, higher energy prices and still-strong food inflation currently suggest (year over year) headline CPI inflation will move up 0.2 (percentage points) to 8.4%, exacerbating the national conversation regarding how quickly price pressures will ease,” Rob Dent, U.S. senior economist at Nomura.
Rising prices, especially for gasoline, have become a huge political problem for President Joe Biden and the Democrats, who face severe losses in November’s midterm elections.
A poll released Thursday by The Washington Post and George Mason University’s Schaar School of Policy and Government found that 66% of Americans expect inflation to get worse in the coming year, while 21 percent expect it to get better and 12 percent think it will stay the same.
The Fed follows an inflation gauge different than the CPI, but even that forecasts inflation will remain elevated throughout the year, ending 2022 at 4.3% and falling to 2.8% in 2023.