If the Federal Reserve’s goal is to tamp down inflation by tinkering with the employment market, it might need a new strategy.
Last week, the number of people applying for unemployment benefits in the United States hit a four-month low, according to statistics released Thursday by the Labor Department.
U.S. jobless aid applications for the week ending Jan. 14 fell to 190,000, a 15,000-application drop over the week before, according to the Labor Department. The four-week moving average of claims declined by 6,500 to 206,000.
The labor market is closely watched by the Federal Reserve, which raised interest rates seven times last year in a bid to slow job growth and bring down stubbornly high inflation.
This news follows reports earlier this month that the U.S. economy adde 223,000 jobs in December. The unemployment rate fell to 3.5%, the lowest it’s been in more than 50 years.
According to an Associated Press report, though, December’s jobs data suggested that the labor market may be cooling in a way that could aid the Fed’s fight against high inflation. It was the smallest gain in two years, and it extended a hiring slowdown that began last year, the AP reported.
In forecasts updated last month, the Fed’s policymakers predicted slower growth and higher unemployment for next year and 2024. The unemployment rate is projected to jump to 4.6% by the end of 2023. That would mark a significant increase in joblessness and typically would reflect a recession, which many economists have predicted.
The Fed’s rate hikes last year have made it more expensive for consumers to take out mortgage and auto loans, and raised borrowing rates for credit cards.
Though the U.S. labor market remains robust, layoffs have been mounting among technology companies. The AP reported that Microsoft announced a cut of some 10,000 workers, almost 5% of its workforce.
Amazon had already announced it is laying off some 18,000 workers, while the software company Salesforce will slice some 8,000 jobs. Meta, Twitter, DoorDash and others have announced cuts in recent months as well.
About 1.65 million people were receiving jobless aid the week that ended Jan. 7, an increase of 17,000 from the week before.
