KPMG chief economist Diane Swonk reacts to the surprising January jobs report and discusses the impact of the Fed’s next rate move on ‘Making Money.’
The number of Americans filing for unemployment benefits rose more than expected last week as high-profile companies continue to announce major job cuts.
Figures released Thursday by the Labor Department show initial claims for the week ending Feb. 24 jumped by 13,000 to 215,000, above the 210,00 estimate by Refinitiv economists. However, that is slightly below the 2019 pre-pandemic average of 218,000 claims.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, hit 1.9 million for the week ended Feb. 17, up 45,000 from the previous week and the highest level since November.
THE NUMBER OF HIGH-PAYING JOBS IS DWINDLING
A job seeker attends a Veteran Employment and Resource Fair in Long Beach, California on Jan. 9, 2024. (Photographer: Eric Thayer/Bloomberg via Getty Images / Getty Images)
The labor market has remained historically tight over the past year, defying economists’ expectations for a slowdown. Economists anticipate the labor market will continue to slow in coming months as higher interest rates work their way through the economy.
The Federal Reserve raised interest rates 11 times beginning in March 2022 in an effort to rein in inflation and cool the labor market. Policymakers have suggested that fast wage growth – the product of a strong labor market – was a contributing factor to the inflation crisis that ravaged millions of Americans’ pocketbooks over the past few years.
AMERICANS IN THESE STATES ARE GETTING A PAY RAISE THIS YEAR
There are growing signs the labor market is beginning to weaken in the face of higher interest rates and stubborn inflation.
Amazon Prime delivery person in van sorting packages, Queens, New York. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images / Getty Images)
There has been a wave of notable layoffs since the start of the new year, and the list grows longer by the day. Alphabet, Amazon, American Airlines, Citigroup, Snap and UPS are among the major companies cutting jobs.
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Still, job growth unexpectedly surged at the start of the year as employers added a whopping 353,000 new jobs. The unemployment rate also held steady at 3.7%. The surprisingly strong report painted a picture of a job market that has gone largely unscathed despite higher interest rates, but it also diminished the odds of an imminent rate cut.
The Labor Department will release the February employment report on March 8 at 8:30 a.m. ET.
