Unemployment Benefits Applicants Reach 212,000, Reports One America News Network
OAN’s Brooke Mallory
2:37 PM – Thursday, April 4, 2023
9,000 more people applied for unemployment benefits last week, bringing the total to 212,000—the highest number since January.
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The number of unemployment claims has reached its highest point in months, and the data suggests that the labor market may be cooling off a little while the Federal Reserve maintains high interest rates and signals that it may raise rates once more.
Unemployment insurance claims are viewed as a stand-in for layoffs. A higher number of claims indicate that employees are now being let go more often. The latest figures align with certain predictions that the labor market will contract.
Additionally, with the new $20 minimum wage raise in California, many suspect that this could be one plausible reason for the rise in unemployment benefits applicants, since companies often lay off employees and raise prices in order to counteract paying their employees more money.
“Net, net, there are no cracks appearing in the labor market, which makes the chance of the Fed executing on all three of the rate cuts forecast for later this year look increasingly unrealistic,” said Chris Rupkey, a chief economist. “Fed Chair Powell has said repeatedly that weakness in the labor market could prompt a response by policymakers, but there is currently no reason to relax the monetary policy tightening regime they have put in place.”
The Federal Reserve increased its target interest rate from 5.25% to 5.50%, the highest level since the early 2000s dot-com bubble. The most pressing topic at hand is when the Fed will begin reducing interest rates.
The central bank now has more leverage to keep rates higher for longer since inflation is still too high in light of recent employment figures. The latest consumer price index shows that annual inflation has stayed above 3%, despite the Fed’s target of getting it down to 2%.
The CME Group’s FedWatch tool indicates that investors are implying a probability of over 61% that the Fed will ultimately cut interest rates by the time its June meeting concludes.
The FedWatch tool computes the probability using futures contract prices for rates in the short-term market that the Fed targets.
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