By Arsenio Toledo
According to a report released by the Department of Labor, the seasonally adjusted initial unemployment claims for the week ending July 23 was 256,000. This is a decrease of just 5,000 from the previous week’s seasonally adjusted level. (Related: US unemployment claims rise to highest level in eight months.)
Continuing claims for state unemployment benefits for the week that ended on July 16 fell by 25,000 from a week ago to 1.359 million. The four-week moving average for continuing unemployment claims rose to 1.362 million.
Despite the slight dip in initial unemployment claims, economists have noted that mass layoffs are still occurring and the trend still shows that unemployment is increasing.
“If the gradual increase in layoffs persists – they’re up 90,000 from mid-March – initial claims would reach typical recessionary levels by the end of next January,” said Eliza Winger, an economist working for Bloomberg. “However, continuing claims also should trend higher in a recession, but the labor market remains tight and is able to absorb laid-off workers.”
Fed interest rate hikes weakening the economy and the labor market
The Federal Reserve recently announced a 75 basis-point (0.75 percent) rate hike on Wednesday, July 27, which pushed the Fed’s interest rate between 2.25 percent and 2.5 percent. This is the fastest tightening of the central bank’s monetary policy since the 1980s.
Higher interest rates will no doubt lead to a weakening of the economy, which will have reverberating effects on the labor market.
A lot of companies in many industries, notably the tech industry and the housing sector, are announcing hiring freezes and job cuts, further proving the volatility in the labor market and the possibility of America entering a recession.
Fed Chair Jerome Powell rejected the claim that the United States is either entering or already in a recession. He said the low unemployment rate, rising wage growth and job gains prove this.
“It doesn’t make sense that the U.S. would be in a recession,” he said.
But recent data shows that America’s GDP fell by 0.9 percent in the second quarter of the year. This followed a 1.6 percent decline during the first quarter. Many economists note that two consecutive quarters of GDP decline is a sign of recession.
Economist Mohamed El-Erian, the former chairman of the Global Development Council under former President Barack Obama and the president of Queen’s College, Cambridge, said that the latest GDP report indicates that the economy is “weakening at a much faster rate than most people expected.”
But the White House has pushed back against this claim, with National Economic Council advisor Brian Deese claiming that two negative quarters of GDP growth is “not the technical definition of recession.”
Learn more about the labor market and the state of the American economy at MarketCrash.news.
Watch this clip from InfoWars as Robert Barnes and George Gammon talk about the true dangers of inflation and the Federal Reserve printing money.