The number of Americans who applied for unemployment benefits last week fell to a two-month low of 228,000, reaffirming the strength of the U.S. jobs market.
New jobless claims declined by 9,000 from 237,000 in the prior week, according to the government.
Jobless Claims and the July 4 Holiday
Jobless claims can sometimes be choppy around the July 4 celebration. Unemployed workers may delay applying for benefits during holidays.
The Relationship Between Unemployment Claims and the Economy
Unemployment claims typically rise when the economy weakens and a recession is imminent. Although claims have increased this year from historic lows, the jobs market remains strong. The economy has added 1.7 million jobs in the first half of the year.
Read: ‘If You Know a Recession Is Coming, Why Would You Hoard Workers?’
The Big Picture
The relatively small increase in jobless claims this year indicates that most companies have enough demand for their goods and services to keep their workers busy.
As long as the majority of people remain employed, the economy may be able to avoid the widely predicted recession. Many economists believe that rising interest rates, which are being orchestrated by the Federal Reserve to curb high inflation, are likely to trigger a downturn by 2024.
Market Reaction
The Dow Jones Industrial Average (DJIA) and S&P 500 are set to have mixed performance in Thursday trades.
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