Labor Market Shows Signs of Cracking

labor market
Labor market monitoring | Image by FOTOGRIN

ZeroHedge economists reported on Thursday that after the Federal Reserve’s announcement that GDP shrank in Q1, the U.S. Labor Force was the last “pillar” holding up the U.S. Economy.

Unfortunately, that pillar is showing a few cracks. According to the U.S. Bureau of Labor Statistics (BLS), the U.S. job market saw a rise of 1,000 new unemployment claims in the first week of May. The number of new claims jumped to 203,000 from 202,000.

Reuters reports the forecast for that week was 195,000 filings, well below the actual number reported by the BLS. Economists blame significant increases in states like California, Virginia, and Illinois. These numbers offset a decline of 9,811 claims in New York.

Economists say jobless claims remain far below numbers from a year ago despite the recent rise. Jobless claims remain close to the 53-year-low recorded in March, when 166,000 were made for state and federal unemployment. Economists tell Reuters recent holidays increased market volatility and were partly to blame for two straight weeks of increases.

Jobless claims hit an all-time during the peak months of the COVID-19 pandemic. Reuters states over 6 million were filed in the U.S. in April 2020. From the first week in March 2022 through the end of April, jobless claims remained below 200,000.

The job outlook in the U.S. is not all bad. Business Insider reports millions of people have left their jobs during the so-called great resignation to seek out new forms of employment.

Despite the number of unemployment claims filed, this movement has left more than 11 million jobs open.

As inflation continues to increase and the Federal Reserve attempts to “tighten the belt” by raising interest rates, the next sign of problems in the U.S. economy will be mass corporate firings. The first round of corporate layoffs took place at Carvana. The vehicle retailer fired 10% of its staff this week.

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