The number of Americans filing first-time claims for unemployment benefits rose by 4,000 to 230,000 last week, the Labor Department reported on Thursday.
The four-week moving average, meanwhile, was 230,000 – up 1,000 from the prior period.
The weekly number was in line with estimates of 230,000 and compares to a revised 226,000 last week.
Claims have been moving up as the economy slows and layoffs increase. However, the labor market overall is still fairly strong, although it has cooled from its breakneck pace of earlier this year.
The Federal Reserve is looking for the job market to slow, bringing it closer to a balance of supply and demand. There are still roughly 1.7 jobs for every available worker, a number that is historically high.
On the flip side, the strong labor market is one reason why some economists say that even if the Federal Reserve manages to tip the economy into recession next year, it could be a mild downturn.
Political Cartoons on the Economy
“We’re going to see job losses starting in the first quarter of next year,” says Dan North, chief economist for North America at credit insurer Allianz Trade. “An economy can’t tolerate an assault by the central bank.”
A more sanguine outlook comes from Victor Li, an economics professor at Villanova University, who says “the good news is that it is still possible for the Federal Reserve to engineer a soft landing.”
“There’s this underlying support the economy has,” Li says, pointing to consumers willing to spend, use credit cards and draw down savings built up during the pandemic. “There’s a lot of mixed signals right now in the economy.”
Indeed, Curtis Long, chief economist and vice president of research at the National Association of Federal Credit Unions, says his members see loan activity holding up while acknowledging his member institutions have seen credit card balances increasing.
But, Long adds, “I just don’t see the evidence for a severe economic downturn right now.”
The November survey of credit union members, for example, found that overall delinquency rates were flattening but remaining “well below” pre-coronavirus levels. Credit card delinquencies, while rising, are still below pre-coronavirus levels.
But while economists split hairs over the likelihood of a recession, workers have a clear opinion, according to a recent American Staffing Association Workforce Monitor survey conducted by The Harris Poll released Wednesday.
The survey found that “nearly eight in 10 adults (77%) say the U.S. economy is either on the road to a recession in the next 12 months (35%) or already there (42%).”
“The effects of a recession are hitting workers across business sectors – including tech and social media companies, e-commerce, and real estate,” said Richard Wahlquist, president and chief executive officer at the ASA. “As employers focus on reducing expenses and belt tightening, workers are considering turning to second jobs or extra shifts to make ends meet.”
The Fed will meet next week and by then will have had two important readings on inflation to digest as it considers another hike in interest rates. On Friday, the government will report producer prices for November, followed next Tuesday by the consumer price index report.
Long-time Fed watcher Hugh Johnson is looking for the PPI to come in 0.2% higher than October, but for the yearly comparison to be 7.2%, down from 8% a month earlier. As for the CPI, he forecasts a yearly number for November of 7.3%, down from 7.7% in October and June’s peak of 9.1%
“At the end of this week and beginning of next week will be, once again, an inflation week, “Johnson says. “The year-year numbers are expected to continue ‘to improve.’”