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U.S. jobless rates reached its highest level in eight months increasing by 14,000 last week to 262,000, Washington Examiner reports.
There have
been fears in the last couple of months that the United States economy may be
sliding into recession as inflation surged leading to interest rate hikes by the
Federal Reserve. The move has inevitably increased the cost of doing business
in the country. Rising job claims can often indicate that employers may be
laying-off workers.
How is U.S. job market faring?
In August
2021, jobless claims averaged over 400,000 per week but tanked to 166,000 in
mid-March, its lowest since 1968, Washington Examiner reported.
In July the U.S.
economy added 528,000 jobs prompting economist to dismiss possible recession
fears, arguing instead that the economy was doing well in certain areas. The employment
rate still stands at a low figure of 3.5%.
Another sign
the economy may have either entered or was about entering recession is the GDP growth
which fell at an annual rate of 0.9% in the second quarter of 2022. The GDP
have declined two straight streaks – which may qualify for the definition of
recession.
The National
Bureau of Economic Research, a private academic group defines a recession as “a
significant decline in economic activity that is spread across the economy and
that lasts more than a few months.”
How much damage has interest rate hikes done to the American economy?
In July the
Federal Reserve hiked the nation’s interest rate by three-quarters of a percent
in a bid to stem soaring inflation, increasing fears of possible recession.
The Fed noted
that ongoing increases in its target range “will be appropriate” in the months
ahead.
Such hikes
in interest rates would result in increases in rates for home mortgages and
other consumer loans, according to The Washington Times.
What is the current U.S inflation figures?
U.S.
inflation figures released early July rose to about 11.3% as measured by
producer wholesale prices for the month of June 2022, according to a report
from the Bureau of Labor Statistics.
The report
came a day after headline inflation measured by the consumer price index rose
to 9.1% for the 12 months ending in June, the highest level since 1981,
Washington Examiner reported.
The Federal
Reserve is struggling to control skyrocketing inflation by further raising
interest rates after raising rates three times since the beginning of the year.