Last week, there was a slight increase in the number of Americans filing for unemployment benefits, reaching 230,000 according to a report by the Labor Department on Thursday. This figure was in line with economists’ projections. The four-week average of claims also rose by 500 to 230,750. Despite these increases, the total number of Americans receiving jobless benefits only went up by 5,000, remaining at approximately 1.85 million for the week ending on August 31st.
Unemployment claims are still at historically low levels, though they have risen compared to earlier in the year. The average number of claims per week during the first four months of 2024 was 213,000, but this number began to rise in May, reaching 250,000 by late July. This increase in claims suggested that the strong U.S. job market was starting to cool down after a prolonged period of growth.
In August, employers added 142,000 jobs, an improvement from July’s 89,000, but below the average monthly gain of nearly 218,000 from January to June. Furthermore, recent reports from the Labor Department revealed that the U.S. economy actually added 818,000 fewer jobs between April 2023 and March this year than initially reported. This revision aligns with the evidence showing a gradual slowdown in the job market, further supporting the Federal Reserve’s decision to start reducing interest rates.
The Federal Reserve has been combatting high inflation that peaked over two years ago by raising its benchmark interest rate 11 times in 2022 and 2023. Despite this, inflation has been decreasing steadily and is now approaching the Fed’s target of 2%. Fed Chair Jerome Powell recently stated that inflation was mostly under control.
Analysts anticipate that the Federal Reserve will make a modest cut of a quarter of a percentage point to its benchmark rate at the upcoming meeting, rather than a more significant half-point reduction that some had predicted. This decision reflects the ongoing efforts to balance economic growth and inflation control.
