Applications for jobless benefits fall

By Matt Ott, Associated Press, January 19, 2024.

The number of Americans applying for unemployment benefits last week fell to its lowest level in more than a year, underscoring the resilience of the labor market despite elevated interest rates that are intended to cool the economy.

Jobless claim applications fell to 187,000 for the week ending Jan. 13, a decrease of 16,000 from the previous week, the Labor Department reported Thursday. That’s the fewest since September of 2022.

The four-week average of claims, a less volatile reading, fell by 4,750 to 203,250. That’s the lowest four-week average in almost a year.

Overall, 1.81 million Americans were collecting jobless benefits during the week that ended Jan.6, a decline of 26,000 from the previous week.

Massachusetts reported 8,470 new “advance’’ initial claims for unemployment insurance last week, meaning it is the state liable for paying out benefits, though not all claimants necessarily live in Massachusetts, according to the Labor Department.

Weekly unemployment claims are viewed as representative for the number of US layoffs in a given week. They have remained at extraordinarily low levels despite high interest rates and elevated inflation.

In an effort to stomp out the four-decade high inflation that took hold after an unusually strong economic rebound from the COVID-19 recession of 2020, the Federal Reserve raised its benchmark rate 11 times since March of 2022.

Though inflation has eased considerably in the past year, the Labor Department reported last week that overall prices rose 0.3 percent from November and 3.4 percent from 12 months earlier, a sign that the Fed’s drive to slow inflation to its 2 percent target will likely remain a bumpy one.

The Fed has left rates alone at its last three meetings and most economists are forecasting multiple rate cuts this year.

As the Fed rapidly jacked up rates in 2022, most analysts predicted that the US economy would tip into recession. But the economy and the job market remained surprisingly resilient, with the unemployment rate staying below 4 percent for 23 straight months, the longest such streak since the 1960s.

The combination of decelerating inflation and low unemployment has raised hopes that the Fed is managing a so-called soft landing: raising rates just enough to bring down prices without causing a recession.

Dana Gerber of the Globe staff contributed to this report.

 Image Credits: Nam U. Huh – Associated Press