MARCH 6, 2023 – JOBLESS CLAIMS FALL; LABOR MARKET REMAINS STRONG
The US labor market is showing resilience despite the rising risk of a recession. Initial claims for unemployment benefits fell last week; it’s the seventh week in a row claims remained below 200,000. This sustained labor market strength, along with growth in wages, raises concerns the Fed will keep hiking interest rates.
Minimal layoffs have not had an impact on the unemployment rate, and many employers are hesitant to lay off people after experiencing difficulty in hiring during the pandemic. Expectations are February’s payrolls will have risen by 215,000 when the data is released on Friday.
A strong labor market, along with persistent inflation, are causing economists to believe the Fed will raise rates at least three times this year instead of twice. The Fed has raised rates by 450 basis points since last March, bringing rates up from effectively zero to a range of 4.5 to 4.75 percent.