The downward trend in jobless claims since the omicron variant peaked in mid-January is a strong sign that employers are becoming increasingly desperate to hold on to workers. Weekly jobless claims are seen as a proxy for layoffs and have been watched closely in recent weeks as the Federal Reserve begins raising interest rates in an effort to curb inflation.
The general trend of declining layoffs is a good economic sign for President Joe Biden, who has been staring down low approval ratings and displeasure with how his administration has handled rising inflation. It also gives the Federal Reserve, which just raised interest rates for the first time in years, confidence in its plan to tighten monetary policy.
"The stability of the job market stands in stark contrast with the high degree of uncertainty the world is facing with the war in Ukraine, high inflation, and the prospect of further supply chain disruptions with China’s efforts to get COVID under control," said Mark Hamrick, a senior economic analyst at Bankrate.New jobless claims have been in a steady retreat over the last year. Around this time in March 2021, new claims were averaging more than 700,000 per week.
After good numbers in January, the economy again exceeded expectations and added 678,000 jobs in February, a hopeful sign that the labor market is returning to its pre-pandemic strength. The central bank announced it would raise its interest rate target by a quarter of a percentage point in an effort to curb soaring inflation, a major step away from its pandemic-era emergency policies. The quarter-point hike was more modest than some economists who were hoping to see a half-point raise had wanted.Inflation has been the biggest economic problem plaguing the country. Consumer prices rose 7.9% for the 12 months using February, the fastest rate of increase since 1982.
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