<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1660772659734,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1660772659734,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
$bp("Brid_60772653", {"id":"27789","width":"16","height":"9","video":"1076823"}); ","_id":"00000182-adc3-d0cd-a7af-addbad220000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThe number of new applications for unemployment benefits fell by 2,000 last week to 250,000, defying fears of a recession.
Rising jobless claims, a proxy for layoffs, are a sign that the labor market may be facing some turbulence, but the number is still low by historical standards.
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In recent weeks, jobless claims have risen and hovered at levels not seen since November of last year.
Still, the number of new claims for unemployment isn’t anywhere near where it was during most of the pandemic and has not risen to a rate that would suggest an imminent recession.
“You can’t have a recession without job losses, and right now, we don’t quite have the weekly data to forecast the record low 3.5% unemployment rate is about to turn upward,” said Chris Rupkey, chief economist at FWDBONDS.
Rising jobless claims would be a clue that the tight labor market may be slowing in response to the Federal Reserve aggressively jacking up interest rates. Driving up interest rates naturally slows demand and can result in recessionary conditions.
In order to fight explosive inflation, the Fed has been hiking rates at a historic rate and in June and July conducted two 75-basis-point hikes, which are akin to six typical rate hikes in just two months.
The action, which has become increasingly more desperate, is designed to slow spending, and many economic experts see the Fed’s task of driving up rates while avoiding a recession as increasingly unlikely. The more the central bank is forced to hike rates, the higher the odds become of the United States entering an economic downturn.
In addition to the growing number of jobless claims, GDP growth fell at a 0.9% annualized rate in the second quarter, a preliminary estimate from the Bureau of Economic Analysis recently showed. The report marks the second straight quarter of declining inflation-adjusted GDP — a situation commonly used to define a recession.
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An indication that the economy is not in or near recession, though, is that the economy is adding jobs in huge numbers and the unemployment rate is low.
The economy added 528,000 jobs in July. The unemployment rate, which is taken from a different data source and a different report than Thursday’s jobless claims numbers, also unexpectedly fell to 3.5%, matching the ultralow level it was at prior to the pandemic.
