Initial claims for state unemployment benefits decreased 19,000 to a seasonally adjusted 204,000 for the week ended Dec. 31, the lowest level since the end of September, the Labor Department said on Thursday. Economists polled by Reuters had forecast 225,000 claims for the latest week.
Economists speculated that severance packages and still-strong demand for labor, which made it easier for laid off workers to get another job, were keeping claims low. They also say companies are likely to slow hiring before embarking on layoffs after struggling to find labor during the pandemic. The Fed last year hiked its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007. Last month, it projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023.
The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 24,000 to 1.694 million in the week ending Dec. 24.
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