Indeed, sweeping layoffs in the tech sector over the last couple of months are troubling, but a curious phenomenon has emerged.
The number of new first-time applications for unemployment benefits actually decreased, according to Thursday’s jobs report.
What Happened: After seasonal adjustments, initial claims for unemployment insurance fell by 6,000 from the prior week's total of 190,000 to 186,000 in the week ending Jan. 21.
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Over the last month, fewer Americans — roughly 197,500 — filed to start fresh cycles of unemployment benefits than was typical before the pandemic.
The number of people seeking continued unemployment benefits, known as continuing claims, increased by 20,000 to 1.675 million during the week ended Jan. 14.
Continued claims have increased from lows reached in the spring, indicating that some people are having a harder time finding new employment.
These numbers come on the heels of positive economic growth, with the U.S. economy expanding by 2.1% in 2022 and at an annualized pace of 2.9% in the fourth quarter.
Additionally, the U.S. added 4.5 million jobs last year with an average monthly gain of 375,000.
While some economists still predict a recession in 2023, the steady performance of the economy and the decline of inflation have given hope that the U.S. may be able to avoid it.
Comerica Bank Chief Economist Bill Adams told Benzinga Thursday that the U.S. economy may not be out of the woods yet, and unemployment may tick up laster in the year as a byproduct of the Federal Reserves aggressive interest rate hike campaign.
Comerica expects real GDP to slow to around zero in 2023 due to headwinds from high interest rates, and the housing market correction.
“With growth to slow to below the economy’s potential this year, the unemployment rate will likely rise to over 4.5% by the end of this year,” Adams predicted.
Why It Matters: While those tech like Twitter, Microsoft Corp MSFT, and Alphabet Inc GOOG GOOGL have announced cuts, to Comerica's point, layoffs in real estate are starting to rise from as companies that bulked up their staffs earlier in the pandemic shed employees.
Despite this, other sectors of the job market continue to show strength.
In the retail, leisure, and hospitality industries, wages are particularly strong for people at the lower end of the pay scale. The starting pay for U.S. employees at Walmart Inc WMT in its stores and warehouses will raise to at least $14 an hour starting next month, from the current $12 rate.
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