Jobless claims reached a new high this year despite predictions that claims would remain low, indicating that more layoffs could be in the future.
Key Details
- Last week around 211,000 people filed unemployment claims, outpacing economist predictions for the month and reaching the highest levels since December, according to the Labor Department.
- Continuing claims jumped from 1.6 million to 1.7 million in the previous week, the highest level since January 2022. Continuing claims have been steadily rising since May, Forbes reports.
- While jobless claims rise, career services firm Challenger, Gray & Christmas reported that U.S. employers are cutting jobs at the highest rates since 2009.
- Planned layoffs are near 180,713 so far this year—a 427% jump from last year, Forbes reports.
- More rounds of layoffs could be in the future if the economy continues to slow. The Federal Reserve has continued raising interest rates to cool the economy and curb inflation.
- While the tech industry has been overwhelmingly affected by layoffs, data from Challenger showed that last month layoffs occurred across all sectors.
Why it’s news
Layoffs were mainly a concern in the tech industry last year, but now layoffs are beginning to creep into all industries. The Fed has steadily increased interest rates to cool off the economy and bring down inflation. However, until now, the economy has remained resilient, with consumers continuing to spend and the labor market remaining tight.
More layoffs across multiple industries could signal that the Fed’s efforts are beginning to have the desired effect.
In early February, a stronger-than-expected jobs report led many to believe the Fed would continue its rate hikes. Some even predicted that the Fed might push interest rates above 5%, Bloomberg reports.
Following that jobs report, Fed Chair Jerome Powell hinted that more rate increases could come in the future. Though inflation has begun to slow, Powell has indicated concern about the tight labor market. If the labor market is starting to weaken, some policy changes could come from the Fed.
