Joblessness just touched an all-time high of 200,000

In accordance with the Labor Department, the number of Americans submitting first-time jobless claims increased last week but stayed below the vital 200,000 mark. Nevertheless, the figure was higher than predictions of 180,000 and 19,000 more than the previous week’s corrected figure. As a result, the four-week moving average stood at 188,000, up 8.000 from the last week.

The news follows market updates that businesses hired only 247,000 people in April, significantly less than the 390,000 expected. In addition, while projections call for growth of 390,000, Wells Fargo cut its forecast from 400,000 to 300,000 on Wednesday, citing weakening economic indicators.

“Employers are being squeezed right now,” say experts in the Manpower industry, between the need to fill positions in an extremely tight labor market and rising prices that are eroding profit margins.

The tightness of the labor market was highlighted by the Labor Department’s announcement on Tuesday that there are now a record 11.5 million open vacancies or about two people for every job. That’s about twice what it was before the outbreak.

“Real salary growth is below inflation,” according to income strategists . “For businesses, it means going from a world where there are three contenders for every position to one where a candidate has three options.”

Following this announcement that the Federal Reserve would raise interest rates by 50 basis points, the most significant rise since 2000, Federal Reserve Chairman Jerome Powell told reporters that the job market remains tight.

Powell also stated that the Fed would reduce its Treasury and mortgage-backed securities holdings to $47.5 billion per month for three consecutive months, then $95 billion per month.

The steps come as the Fed shifts its focus from stabilizing the labor market after the coronavirus outbreak to combating inflation, which is currently approaching 8% yearly. The market reacted positively to Powell’s hawkish approach, with the Dow Jones Industrial Average rising more than 900 points following the news.

The first-quarter report on the gross domestic product showed a drop in economic growth and some signs that prices in the goods sector are slowing, according to research analysts. For the time being, experts feel the economy is robust enough to sustain another round of monetary tightening. Still, much will rely on events beyond the Fed’s control, such as the Ukraine war and global supply chains.

“As a consequence, rate rises in the first half of ’22 shouldn’t be disruptive,” said a renowned chief investment officer of private wealth. “However, the Fed will need to be cautious to avoid over tightening later in the year.” “Because inflation is driving this tightening cycle, events on that front will be critical in determining whether the Fed has to raise rates that far.” As a result, the (consumer prices) report next week will be a significant indication to watch for an update on the latest inflation developments.”