Initial jobless claims in the United States rose to an eight-month high, a sign that the job market may slow, raising concerns that the economy is headed for recession.
On Thursday, the Department of Labor released its initial weekly jobless claims and found that the total number of claims reached 251,000 for the week ending July 16, up 7,000 from the previous week.
The numbers beat external estimates, including the Dow Jones, which predicted a total of around 240,000 complaints. This figure is the highest since November 13, 2021, when the number of jobless claims reached 268,000. The numbers remain well below pandemic levels and are not considered by economists to be a significant threat to the labor market or the economy in general. They also don't meet recession indicators.
Dr. Julia Coronado, the founder of MacroPolicy Perspectives, noted that initial jobless claims tended to stay above 300,000 just before a recession. Although it has been the highest in recent months, recent numbers remain well below that threshold.
"The job market is easing, but probably not on the brink of recession," Coronado tweeted. For months there have been fears that the current state of the labor market will remain unhealthy despite the recovery from the pandemic. At the Federal Reserve, President Jerome Powell described the current working conditions as "extremely harsh," calling it a justification for the Fed's increasingly aggressive approach to interest rates.
The Fed has raised interest rates three times since March in an effort to reduce inflation and will meet again next week to determine if another hike is imminent. However, some economists fear that the Fed's current approach could trigger a recession if it leans too much on broader rate hikes.