The number of Americans filing for jobless benefits dropped last week, a sign that few companies are cutting jobs despite high inflation and a weak economy.
Applications for unemployment benefits for the week ending Sept. 24 fell by 16,000 to 193,000, the Labor Department reported Thursday. Last week’s number was revised down by 4,000 to 209,000.
First-time applications generally reflect layoffs. The current figures are very low historically and suggest Americans are benefiting from an unusually high level of job security.
The economy shrank in the first six months of the year, according to reports on gross domestic product, the government’s broadest measure of the economy’s output.
Yet employers, who have struggled to rehire after laying off 22 million workers at the height of the pandemic, are still looking to fill millions of open jobs. There are currently roughly two open positions for every unemployed worker, near a record high.
With companies desperate for workers, they are much more likely to hold onto their current staff.
The news comes as data shows the U.S. economy shrank at a 0.6 percent annual rate from April through June, battered by surging consumer prices and rising interest rates.
Government statisticians’ announcement Thursday was unchanged from their previous second-quarter estimate.
It marked the second consecutive quarter of economic contraction, one informal rule of thumb for a recession. Most economists, citing a strong and resilient American job market, believe the world’s biggest economy is not yet in a downturn. But they worry that it might be headed for one as the Federal Reserve ratchets up interest rates to combat inflation.
Consumer spending grew at a 2 percent annual rate, but that gain was offset by a drop in business inventories and housing investment.
The U.S. economy has been sending out mixed signals this year. Gross domestic product, or GDP, went backward in the first half of 2022. But the job market has stayed strong. Employers are adding an average 438,000 jobs a month this year, on pace to be the second-best year for hiring (behind 2021) in government records going back to 1940. Unemployment is at 3.7 percent, low by historic standards. There are currently about two jobs for every unemployed American.
But the Fed has raised interest rates five times this year – most recently Sept. 21 – to rein in consumer prices, which were up 8.3 percent in August from a year earlier despite plummeting gasoline prices. Higher borrowing costs raise the risk of a recession and higher unemployment. “We have got to get inflation behind us,″ Fed Chair Jerome Powell said last week. “I wish there was a painless way to do that. There isn’t.″
Thursday’s report was the Commerce Department’s third and final take on second-quarter growth. The first look at the economy’s July-September performance comes out Oct. 27. Economists, on average, expect that GDP returned to growth in the third quarter, expanding at a modest 1.5 percent annual pace, according to a survey by the data firm FactSet.
Commerce also on Thursday released revised numbers for past years’ GDP. The update showed that the economy performed slightly better in 2020 and 2021 than previously reported. GDP rose 5.9 percent last year, up from the previously reported 5.7 percent; and, pounded by the coronavirus pandemic, it shrank 2.8 percent in 2020, not as bad as the 3.4 percent previously on record.
GDP remained unchanged for 2018 (2.9 percent) and 2019 (2.3 percent). Growth for 2017 was downgraded slightly – to 2.2 percent from 2.3 percent.