The number of Americans filing for first time unemployment benefits fell to 166,000 last week – the best reading in more than 50 years and one that shows a labor market that has essentially recovered from the two-year shock of the coronavirus pandemic.
The number, reported by the Labor Department on Thursday, compares to a revised figure of 171,000 last week.
The four-week moving average was 170,000, down 8,000 from the previous week’s level.
However, the government has revised the way it estimates seasonality in the data, which it says could lead to larger one-off revisions than usual.
Economic political cartoons
Still, the reading will do nothing to dissuade the Federal Reserve from raising interest rates at a hasty pace throughout the year as it shifts from prioritizing jobs to fighting inflation. .
This process is already underway, with the central bank raising interest rates by 25 basis points last month and markets forecasting a 50 basis point hike next month and in June.
The Fed is also expected to start reducing the $9 trillion it has on its balance sheet, at a monthly rate of $95 billion starting in May.
Both of these measures should have the effect of tightening the money supply and making borrowing more expensive, thereby slowing the economy.
“As the Fed reduces its bond holdings, the Treasury will need private investors to buy more government bonds to refinance federal debt and fund new borrowing,” Comerica’s chief economist wrote Wednesday. Bank, Bill Adams. “All other things being equal, an increased supply of bonds tends to lower bond prices and raise bond yields. But, while monetary policy will push up long-term interest rates, the business cycle will lower them.
“Economic growth will slow as inflation eats away at consumers’ purchasing power and businesses finish restocking,” Adams added. “Oil prices will likely stabilize once the Russia-Ukraine conflict subsides. As economic growth slows and commodity prices come back down, wage growth and inflation are also expected to slow. factors should mainly offset the reduction in the size of its bond holdings by the Fed, limiting the rise in longer-term interest rates.