Initial unemployment claims rose ahead of the Christmas holidays, a sign that the U.S. labor market is cooling in anticipation of 2024.
The number of Americans filing initial claims for unemployment benefits climbed to 218,000 during the week ending December 23, an increase of 12,000 compared to the previous week’s revised level of 206,000, according to the latest Labor Department report. This number is above consensus expectations of 210,000.
Continuing claims, also referred to as insured unemployment, rose by 14,000 from the previous week’s revised level to 1,875,000 during the week ending December 16. The four-week moving average was 1,864,500 during the week ending December 16, a 12,500 decrease from the previous week’s revised average, per the weekly claims statistics.
The largest increases in initial claims during the week ending December 16 were in Ohio (+1,304), Oklahoma (+1,029), Michigan (+580), Connecticut (+472), and Massachusetts (+432). Meanwhile, the largest decreases were in California (-3,834), Georgia (-1,684), Pennsylvania (-588), Arkansas (-541), and Minnesota (-500).
Despite nearly 1.88 million Americans collecting unemployment benefits by mid-December, the national unemployment rate, at 3.7% in November, remains near historic lows, according to the U.S. Department of Commerce. This is in light of the Federal Reserve’s current tightening cycle, which has seen interest rates climb to the highest point in more than 20 years, as reported by The Dallas Express.
The U.S. Central Bank is forecasting three rate cuts in 2024, which would lower the Fed’s benchmark rate from its current range of 5.25%-5.50% to a range of 4.50%-4.75% by the end of next year.
Though the U.S. economy shows signs of softening, employers have mostly remained resilient to the economic headwinds. With the unemployment rate falling below 4% for 22 consecutive months and inflation trending closer to the Fed’s 2% target, the likelihood that monetary policymakers achieve a soft landing in 2024 is steadily growing as new data is assessed.
