Unemployment Benefits Surge Despite Fewer New Claims Last Week

Recent data from the Labor Department reveals a decline in new unemployment benefit applications but reports an overall surge in the total number of Americans collecting jobless benefits, reaching a peak not seen in over two years. This comes amidst a backdrop of economic volatility and rate hikes by the Federal Reserve.

Recent data from the Labor Department reveals a significant trend: while new applications for unemployment benefits have fallen by 6,000 to a total of 233,000 for the week ending June 22, the overall number of Americans collecting jobless benefits has surged to a two-year high of 1.84 million as of June 15.

Thursday's report highlighted that although jobless claims have decreased for the week, the total count of people on unemployment has been on the rise for eight consecutive weeks. This increase highlights ongoing economic challenges, despite the Federal Reserve's 11 rate hikes since March 2022 aimed at taming four-decade high inflation by cooling off a heated labor market.

Despite concerns, many economists had braced for a potential recession following the rapid rate hikes, a scenario avoided so far due to resilient consumer demand and a robust labor market. However, recent data suggests emerging weaknesses, with higher jobless benefit applications in June, an uptick in unemployment to 4% in May, and job postings in April at their lowest since 2021.

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