Jobless claims have fallen for another week, once again defying expectations and showing that the labor market has remained insulated from the country’s rising interest rates.
The number of new applications for unemployment benefits fell by 2,000 to 190,000 last week, the Labor Department reported Thursday.
Falling jobless claims is a sign the labor market is remaining resilient despite the Federal Reserve’s historic effort to tighten monetary policy to slow economy-wide spending and drive down inflation.
The weekly jobless claims number has been closely watched over the past year or so given the Federal Reserve has raised interest rates several times in the past year, including a few massive hikes, in order to drive down inflation, which is running at 6.4%, according to the consumer price index.
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Rate hikes naturally depress economic activity, and thus are expected to lead to job loss, although the labor market has been surprisingly resilient.
The economy gained 517,000 jobs in January, shattering the expectations of most economists. The unemployment rate is now at 3.4% and is the lowest since 1969.
While the number of new jobless claims has remained low enough to avert fear that the country is currently in a recession, many economists anticipate that the U.S. economy will enter a recession because of the aggressive rate hiking at some point this year. That is because rate hikes can take a while to filter through the broader economy and create recessionary conditions and job losses.
It is expected that as the rate hikes begin to ripple across the economy, jobless claims begin to tick up, and then monthly jobs reports will begin to turn negative.
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A recently-released survey of four dozen of the country’s leading business economists, which was conducted by the National Association for Business Economics last month found that 58% of participants predict a recession coming in the next 12 months.