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Thursday, July 22, 2021

Jobless Claims Unexpectedly Rise

The number of Americans filing first-time unemployment claims unexpectedly rose to 419,000 last week, the Labor Department reported on Thursday.

The number was an increase of 51,000 from the previous week's revised level of 368,000. The four-week moving average was 385,250, an increase of 750 from the prior week's revised average. 

Claims had been steadily falling in recent weeks as businesses and other establishments have reopened.

Also, half the states have either curtailed or announced plans to prematurely end the $300-per-week enhanced unemployment benefit that was part of the American Rescue Plan passed by Congress earlier this year.

Yet many companies have reported difficulty finding workers, prompting them to raise wages or offer incentives to lure applicants.

"There's still some room to run before getting back into the 200,000 range where initial claims stood before the pandemic began to rage," Bankrate senior economic analyst Mark Hamrick said ahead of the report.

The health of the labor market is a critical factor the Federal Reserve considers in setting monetary policy. The other is inflation, which has been rising at a rate well above the central bank's goal of 2% annually.

Many economists and President Joe Biden believe that the spike in inflation is temporary, the result of disruptions to global supply chains and labor markets brought on by the coronavirus.

But worries about the highly transmissible delta variant of the virus, which is currently causing a sharp increase in infections and deaths around the world, have spooked the stock and bond markets.

"We could be overreacting to some headline bad news," says Rich Sega, global chief investment strategist at Conning, which manages money for insurance companies and pension funds. "I think we'll get back to the global recovery very soon."

 

 

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