The US economy grows 2.7% in the last quarter of 2022

unemployment support

The number of Americans filing new claims for unemployment benefits unexpectedly dropped last week, continuing to indicate continued tensions in the labor market.

Initial claims for state unemployment benefits decreased by 3,000 to a seasonally adjusted 192,000 for the week ending February 18, the Labor Department reported Thursday. Economists polled by Reuters had forecast 200,000 applications for the past week.

Claims have remained in a narrow range of 183,000-206,000 this year, despite layoffs in tech and interest rate-sensitive industries.

Economists have long argued that the massive downsizing at Twitter, Microsoft, Amazon and Facebook parent Meta, which overhired during the pandemic, are unrepresentative of the broader economy. This opinion is also shared by the monetary authorities.

Minutes from the Federal Reserve’s meeting on January 31 and February 1, released Wednesday, show that “several participants noted that recent payroll reductions at some large technology companies followed much larger increases in previous years.” and they judged that these reductions did not appear to reflect a general weakness in the demand for labor”.

The US central bank has raised its official interest rate by 450 basis points since last March, from near zero to a range of 4.50%-4.75%; most of the increases occurred between May and December. Although two additional increases of 25 basis points are expected in March and May, financial markets are betting on another one in June given the sustained strength of the labor market.