. Officials see that strength as providing ample room for them to continue to raise interest rates to bring down inflation, which by their preferred measure remains nearly three times their targeted level of 2% annually even if it has recently shown signs of heading lower.
The central bank has lifted rates from near zero in March to the current range of 4.25% to 4.50% and Fed officials project it will breach the 5% mark in 2023, a level not seen since 2007. Economists believe that companies are likely to cut back on hiring before embarking on layoffs. Employers have been generally reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic.
The claims report showed the number of people receiving benefits after an initial week of aid rose 41,000 to 1.710 million in the week ending Dec. 17. Those so-called continuing claims, a proxy for hiring, have drifted higher since early October, and the latest report is the first since February to show them reaching the trend level of 1.7-1.8 million that prevailed in the years leading up to the pandemic, a level seen then as emblematic of a tight labor market.
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