The Weekly Claims Report Signals the Fed’s Monetary Policy Tightening
The latest job weekly claims reports will only encourage the U.S. Federal Reserve to resume its tightening monetary policy. The Bureau Of Statistics released last week’s unemployment claims, which declined surprisingly to their lowest level in the past 20 months.
According to Gregory Daco, chief economist at EY-Parthenon in New York, the U.S. economy is showing signs of resilience. The labor market remains tight; however, it shows signs of steady improvement. Grocery says, ”The economy is currently displaying genuine signs of resilience. He added, “This is leading many to rightly question whether the long-forecast recession is truly inevitable or whether a soft landing of the economy is possible.”
Let’s put some numbers into perspective: there was a significant decrease in the number of people filing for state unemployment benefits during the week ending June 24. The drop is notable because it is the largest decline in initial claims since October 2021. It could potentially indicate positive changes in the job market, such as increased employment opportunities or improved economic conditions.
- Unadjusted claims dropped by 17,843 to 233,048, indicating a decrease in individuals filing for unemployment benefits without seasonal adjustments.
- California’s claims tumbled by 10,108, while Texas saw a plunge of 9,187, suggesting improvements in employment situations in these states.
- Pennsylvania reported a decrease of 3,263 claims, and Minnesota saw a decline of 2,387, indicating potential improvements in their job markets.
- Connecticut experienced a surge of 6,013 claims, and New Jersey had a jump of 5,206 claims, suggesting potential challenges or job losses in those states.
Meanwhile, on Wall Street, the S&P and the Dow edged higher when the Nasdaq opened lower. The S&P 500 benchmark was up by 0.44% to 4,396.60 basis points. Boosted by a jump in financials, Dow Jones boosted its opening gains of 0.-7% to the current gains of 0.8% for the seller at 34.122.40 basis points. The jump in these two indexes was mainly because of today’s decision. On Thursday, Wall Street passed the Federal Reserve’s annual stress test.
The annual stress tests conducted by the Federal Reserve aim to assess the resilience of large financial institutions, identify vulnerabilities, improve risk management practices, enhance transparency, and inform regulatory decisions to maintain the stability of the financial system. Based on today’s test, Wall Street shows signs of strength and promised abilities against recession.
As for the giant tech index, Nasdaq failed in today’s session; the index is currently down by 0.1%.
As for the stress test, Big banks like Wells Fargo, JPMorgan Chase, and Goldman Sachs had a good day on Wall Street. The Federal Reserve’s stress test showed that these banks and 20 others could handle a severe recession. However, there are still doubts about smaller regional banks due to recent banking problems.
Over all, it’s important that both of today’s indicators encourage monetary policymakers to keep raising interest rates to prevent inflation.