US Initial Jobless Claims Unexpectedly Exceed Forecasts
US initial jobless claims surprisingly jumped by more than expected last week, despite optimistic sentiment that the country’s labour market is slated for a strong comeback heading into the fall season.
According to the Department of Labour, first-time applications for unemployment benefits jumped by 51,000 to 419,000 last week, marking the highest total since late March. Economists surveyed by Bloomberg forecast a total of 350,000 applications. The latest figures sent government bond yields lower, while stock market futures slumped from their morning highs.
On the other hand, continuing claims, which are one week behind the headline figures, fell by 29,000 to 3.24 million for the week ending on July 10, marking the lowest total since March 14, 2020. However, when analyzed at the state level, the number of continuing claims for state unemployment benefits deviated significantly across states that phased out their benefit programs ahead of September’s statutory expiration.
In short, Americans have been returning to work in states where government dole is no longer paying them to sit on the couch, while initial and continuing claims continue to rise across states that are clinging onto the September deadline.
With that, lets consider the following scenario: once the federal government’s generous unemployment benefits completely run dry, and millions of Americans are forced to re-enter the labour market, what will become of theirs, and everyone else’s wages, as companies’ gross profit continues to be eroded away by skyrocketing inflation? Stagflation, anyone?
Information for this briefing was found via the DOL and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
