Unemployment Rate Starting To Skyrocket?
The number of weekly claims of people filing for unemployment increased to 225,000 on December 24th, which was an increase from the 216,000 filed the week prior which could indicate a rising unemployment rate.
Labor market analysts watch unemployment rate numbers closely since it is a key indicator of economic health. For a while, it appeared things were finally looking up, and we were turning a corner. Unfortunately, the latest December unemployment news dampened the festive holiday spirit.
There are two distinct unemployment rate categories that economists measure. First is the continuing claims. This category is for all workers filing unemployment each week.
The second category is first-time claims. These come from individuals filing initial claims after losing their job. And first-time unemployment claims offer a great glimpse into the overall health of the job market.
But, the unemployment rate is highly volatile. The number changes weekly since unemployed workers have to file regularly. They are also particularly unpredictable around the holidays.
Since so many companies hire seasonal workers, the number of employees floating in and out of unemployment fluctuates. So analysts tend to watch for trends, particularly during this time of year. And those trends are often quite telling.
Earlier in the year, the trends indicated that we were finally coming out of unemployment rates reached during the pandemic. The numbers provided a spark of hope that the economic situation wasn’t as dire as many feared. However, that hope got dashed when the latest numbers got released.
On Thursday, the Department of Labor released data from the week ending December 24. According to CNN, “First-time claims for weekly unemployment benefits increased to 225,000.” The good news is that the report matches the number economists expected.
But the bad news is that the number of initial claims in the new report far exceeds those from the previous week. The first-time unemployment rate the week prior was 216,000. To put this number in perspective, the average weekly number of initial claims in 2019 was 219,000.
“The steady level of initial claims continues to paint a ‘very tight picture’ of the US labor market, said Eugenio Aleman, Raymond James’ chief economist.” However, as bad as the initial claims numbers look, the continuing unemployment rate is far worse. For the week ending December 17, there were 1.71 million continuing claims.
That number is up significantly from the previous level of 1.67 million. But the news could be worse. The continuing unemployment rate was slightly higher before the pandemic.
“That’s the highest level since February and just shy of pre-pandemic filings of 1.8 million, and suggests that workers may be having more difficulty finding a new job.” However, what’s interesting is that the high level of unemployment doesn’t mesh well with the number of job openings. Other numbers from the Department of Labor show a disproportionate number of available jobs to available workers.
But there is one caveat. The data on job openings takes about a month to come out. So the latest numbers available are from October.
However, at the end of October 2022, there were 10.3 million job vacancies. That number was down slightly from the previous month, which is good news. But combined with the latest unemployment rate, things are not exactly looking up.
