Unemployment Claims Hold Steady, But Continuing Claims Reach Three-Year High

Unemployment claims in the United States held steady last week, but the number of Americans collecting jobless benefits rose to its highest level in three years, according to data released by the Labor Department on Thursday. The mixed signals from the labor market could have implications for consumer spending and economic growth in the coming months.

The number of Americans filing for jobless benefits remained unchanged from the previous week, with claims for the week ending April 13 at 212,000. The four-week average of claims, which helps smooth out weekly volatility, also held steady at 214,500. This level of new claims is considered historically low and indicates that layoffs remain at bay.

However, continuing claims, which represent the total number of Americans collecting jobless benefits, climbed by 46,000 to 1.91 million for the week of Dec. 14. This is the highest level since the week of Nov. 13, 2021, and signals that more people are remaining unemployed for longer periods.

The rise in continuing claims can be attributed to layoffs in specific sectors, such as technology and media. Companies like Google parent company Alphabet, Apple, eBay, TikTok, Snap, Amazon, Cisco Systems, and the Los Angeles Times have all recently announced job cuts. These layoffs contribute to the rising number of continuing claims, as employees who have lost their jobs continue to collect unemployment benefits.

State-level unemployment insurance policies and durations can also impact the increase in continuing claims. In some states, the duration of unemployment benefits has been extended, allowing more people to collect benefits for a longer period. This can lead to an increase in continuing claims, as more people are eligible to receive benefits for a more extended period.

The increase in continuing claims could potentially influence consumer spending and economic growth in the coming months. As more people are out of work and relying on unemployment benefits, they may be more cautious with their spending due to job insecurity or reduced income. This could lead to a potential slowdown in consumer spending, which is a significant driver of economic growth.

Investors should pay close attention to the labor market trends, as they can have a significant impact on consumer confidence and spending. A weakening labor market could lead to a decrease in demand for stocks, particularly in sectors that are experiencing higher increases in continuing claims, such as technology and media.

In conclusion, while new unemployment claims held steady, the rise in continuing claims to a three-year high signals a potential slowdown in the labor market. Investors should monitor the labor market trends closely, as they can have a significant impact on consumer spending and economic growth in the coming months.