US jobless claims are on the rise, the number of Americans filing for unemployment benefits unexpectedly rose last week due to expired federal jobless benefits.
The US economy is still recovering, but the labor market is indicating that growth is slowing in the face of obstacles ranging from the spread of the Delta variant of COVID-19 to stingier jobless benefits.
Last week, weekly unemployment claims, a proxy for layoffs, increased by 11,000 more than predicted to 362,000. Initial claims have risen for the third week in a row, reaching their highest level since early August.
California had the largest increase by state, with nearly 18,000 more people filing for initial unemployment benefits last week than the week before. The expiration of federal unemployment benefits earlier this month, according to Goldman Sachs experts, may have boosted the number of Californians claiming state unemployment benefits.
“The increase in initial jobless claims was again driven by a rise in California likely related to transitions from expired federal unemployment insurance benefits to other benefit programs,” said Goldman
The health of the labor market is a critical indicator of the world’s largest economy.
Why Americans Filing for Unemployment Benefits
Although the economy has added employment every month this year, it only added 235,000 positions in August as hiring slowed. It is contributed to climbing infections rates from the highly contagious Delta variant of the coronavirus.
Jerome Powell, the chairman of the Federal Reserve, has stated that he and his colleagues are dedicated to preserving their low-interest-rate policies if that is what it takes to put Americans back to work. Powell also said, “factors related to the pandemic, such as caregiving needs and ongoing fears of the virus, appear to be weighing on employment growth.”
In addition, inflation muddies the waters. The Federal Reserve has a twin mandate: to achieve maximum employment while keeping inflation within its long-term goal range of 2%.