MAY 13, 2024 – CONSUMERS UNEASY AS LABOR MARKET SHOWS SIGNS OF SLOWING
It was a busy data week. Consumer sentiment numbers were announced, showing a one month decline of 12.7 percent. The one-year inflation outlook rose to 3.5 percent up 0.3 percent month-over-month and is at the highest level since November 2023. Weekly jobless claims rose to the highest they have been since August 2023.
Consumers are becoming worried that inflation, unemployment and interest rates are all moving in the wrong direction, and the potential negative impact is worrying. Uncertainty in the direction inflation is headed could put a damper on consumer spending, though the April CPI comes out this week, and there are hopes for moderation from last month.
The latest weekly jobless claims indicate the beginning of a weakness in the labor market. The claims data follows several strong hiring reports, though April’s new job numbers were below expectations. The unemployment rate has continued to hold below 4 percent since February 2022, but there is a feeling the labor market is going to slow through the year. The. The jump in claims could be an anomaly, and the Fed will be watching the numbers closely in the upcoming weeks for indications of a sustained slowdown.
The Fed has been cautious on lowering rates, but markets now expect some downward movement on rates in September based on poor labor market data.