A brief uptake in unemployment applications around Christmas is the largest in the past ten months—but doesn’t reflect a negative trend and remains historically low.
Key Details
- The U.S. Department of Labor announced Thursday that unemployment claims have increased in the week leading up to Christmas, between December 17 and 24.
- The four-week average of applications was 221,000 claims per week, with the rate increasing by 9,000 from the previous week to 225,000.
- This marks the highest increase in applications since February 2022.
- Seasonal factors have resulted in an upward trend, although overall trends reflect historic lows for a labor market that continues to see low unemployment.
- The Bureau of Labor Statistics (BLS) reports the U.S. unemployment rate was 3.7% in November.
Why it’s Important
The labor market continues to befuddle economic analysts, who have noted a strange combination of high inflation, economic stagnation, and low unemployment. The Federal Reserve has primed the market for an extended period of reduced consumer spending and high unemployment due to its artificially increasing interest rates to historical levels to uproot entrenched inflation, but the only effect to come of it has been a slow but steady decrease in inflation.
American workers continue to feel optimistic about their job prospects going into 2023 despite the majority of analysts warning of a recession or a spike in unemployment. Recent layoffs in the tech industry haven’t reflected the overall direction of the job market. The demand for labor is very high—and the supply is low. Companies are struggling to fill positions and having to make compromises to keep current staff, such as capitulating on demands for remote and hybrid work options.
The uptake in applications may reflect a seasonal hiccup rather than a larger trend, although that won’t become clear until the lingering effects of the Fed’s hikes begin to affect the economy in the coming months.
“The data can be particularly difficult to seasonally adjust around major holidays. The four-week moving average in initial claims, which smooths out some of that week-to-week volatility, was little changed at 221,000,” says Bloomberg.