MKM Partners chief economist and market strategist Michael Darda responds to “make money” on the resignation of millions of Americans in June.
The number of Americans filing for unemployment benefits fell unexpectedly last week, suggesting demand for workers remains strong amid ongoing labor shortages.
Figures released by the Labor Department on Thursday show that claims for the week ended August 13 fell to 250,000, compared with a downwardly revised 252,000 recorded a week earlier.
That’s above the pre-pandemic average of 218,000 applications in 2019 and just short of the eight-month high of 261,000 recorded in mid-July.
New claims in the first week of August have been revised down from a preliminary reported 262,000, which would have marked the highest level this year.
IS THE UNITED STATES GOING INTO A RECESSION?
A man submits his resume to an employer at the 25th Annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds. (Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images/Getty Images)
Rolling claims, or the number of Americans receiving sequential unemployment benefits, rose slightly to 1.437 million for the week ended August 6, up 7,000 from the revised level for the previous week. This is the highest level since April. For comparison, a year ago nearly 11.82 million Americans were receiving unemployment benefits.
For months, the job market has been one of the few bright spots in the economy. The July jobs report shows that the unemployment rate fell to 3.5% for the first time since the start of the COVID-19 pandemic – a historic low ahead.
However, despite the relatively stable unemployment figures, there are signs that the labor market is weakening. A host of companies, including Alphabet’s Google, Walmart, Apple, Meta and Microsoft, have announced hiring freezes or layoffs in recent weeks.
There are growing fears that the US economy is on the brink of recession as a result of the Federal Reserve’s fight against inflation. The central bank is raising interest rates at the fastest pace in decades as it seeks to slash consumer prices, which rose 8.5% in June – to almost a 40-year high.
The Marriner S. Eccles Federal Reserve building in Washington, DC, USA on Wednesday, July 6, 2022. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)
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Policymakers approved another gargantuan 75 basis point rate hike – triple the usual size – at their July meeting and have since signaled they will be “nowhere near” ending this tightening cycle, despite signs of a slowdown in the economy.