Unemployment in the United States is on the rise

WASHINGTON (AP and EFE).— The number of Americans filing for unemployment benefits rose slightly last week, but remains at a healthy level.

Weekly claims rose 4,000 to 232,000 for the week of Aug. 17, the Labor Department reported yesterday. The four-week average, which smooths out weekly ups and downs, fell 750 to 236,000.

For the week ending August 10, 1.86 million Americans were collecting unemployment benefits, up 4,000 from the previous week.

Weekly applications for unemployment benefits, a proxy for layoffs, remain low by historical standards.

From January through May, claims averaged a low of 213,000 a week. But they began to rise in May, reaching 250,000 by the end of July and adding to evidence that high interest rates are hurting the U.S. labor market.

However, this week’s increase in claims follows two straight weeks of declines, allaying concerns that the labor market is deteriorating rapidly rather than simply slowing.

The Federal Reserve, battling inflation that hit a four-decade high just over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023, taking it to a 23-year high. Inflation has been steadily declining, from 9.1% in June 2022 to a three-year low of 2.9% last month. Despite higher borrowing costs, the economy and hiring continued to improve inching, defying widespread fears that the U.S. was headed for a difficult recession.

The economy weighs heavily on voters as they prepare for the November presidential election. Despite a strong job market and slowing inflation, Americans are still exasperated that consumer prices are 19% higher than before inflation began to take off in 2021.

Low by sectors

By sector, the largest downward revision was in professional and business services, where job growth was down 358,000, the Bureau of Labor Statistics (BLS) said.

In the leisure and hospitality sector, the drop was 150,000, in the manufacturing industry 115,000 and in trade, transport and public services 104,000.

Job creation was also low, with only 114,000 net jobs created.

Fed Pressure Mounts on Jerome Powell

Unemployment in the US is an issue that has people worried about the possible recession.

Lowering interest rates

Pressure has mounted on the Fed to begin lowering interest rates, which have been in the range of 5.25% to 5.5% since July 2023, their highest level since 2001. But members of the Fed’s Federal Open Market Committee (FOMC) do not meet until September 17 and will not announce their decision until the 18th.

The reaction will be today

Fed Chairman Jerome Powell will give a speech today at the Jackson Hole economic forum, which could provide clues as to the direction the regulator will take.

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