Main information
- Jobless claims hit a four-month low last week.
- Hiring has declined and job openings have also fallen, raising concerns about a potential slowdown in the labor market.
- The U.S. economy is expected to continue growing at an annualized rate of about 3 percent in the third quarter.
Job market shows signs of resilience
The number of Americans filing new claims for unemployment benefits fell to a four-month low last week, indicating robust job growth in September. The economic data reinforces the view that the U.S. economy continued to expand in the third quarter. The Labor Department said jobless claims totaled 219,000 for the week ending Sept. 14, down significantly from previous weeks and the lowest level since May. Economists had forecast claims would be around 230,000, the report said. Reuters.
Concerns about potential labor market slowdown
Despite the good news, there are concerns about a potential slowdown in the labor market. Hiring has declined and job openings have also declined, raising concerns that the economy is weakening. However, layoffs remain low, helping to keep consumer spending, which is crucial to overall economic growth, strong.
Strong economic growth continues
Current estimates call for an annualized growth rate of about 3 percent for the third quarter. This follows a strong performance in the second quarter with a growth rate of 3 percent, exceeding the Federal Reserve’s long-run, non-inflationary growth potential rate of 1.8 percent. The Federal Reserve has implemented significant interest rate increases in 2022 and 2023 to combat inflation.
The labor market remains in difficulty
Although initial claims have fluctuated since falling from an 11-month high in late July, which economists largely attributed to temporary plant shutdowns in the auto industry, they are generally in line with last year’s trend. Experts suggest that seasonal adjustment issues could be driving these swings. In his recent speech, Federal Reserve Chairman Jerome Powell acknowledged the positive labor market indicators but stressed the need to remain vigilant.
Mortgage Rates and Home Sales
However, the housing market still faces challenges. Despite improving supply, high home prices are deterring potential buyers. Existing home sales fell 2.5 percent in August, reaching their lowest level in 10 months, according to the National Association of Realtors. The median price of an existing home hit a record high in August, at $416,700, driven by persistent inflation and limited inventory.
Impact on housing prices
While falling mortgage rates, which have hit their lowest level in more than a year, may prompt more homeowners to sell their properties, they may also boost demand, which risks outstripping supply and keeping home prices high.
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