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Number of people collecting unemployment benefits jumps by 51,000

By Masao Suzuki

Continuing claims hits highest number since November 2021

San José, CA – On Thursday, July 21, the U.S. Department of Labor reported that the number of people collecting unemployment insurance benefits, increased by 51,000 for the week ending July 16. This brought the total number to 1,384,000, the highest since November 2021. New claims for unemployment insurance increased to 251,000, also the highest since November. The increase was only 7000 over the week before, but most economists had expected the number of new claims to fall.

The uptick in new claims reflects a rising trend in layoffs, while the rise in continuing claims shows that hiring has slowed, both showing a slowdown in the labor market. This data confirms the growing reports of layoffs and cuts to hiring plans by large companies.

On Wednesday, July 20 the National Association of Realtors reported that existing home sales fell 5.4% in June as compared to May. The June 2022 sales were 14.2% lower than June 2021, as home sales have now fallen for five months in a row. The falling home sales were mainly due to rising mortgage rates, which were 5.52% in June, up from 5.23% in May. Mortgage interest rates were only 2.96% a year ago in June of 2021.

These signs of economic weakness mean that the Federal Reserve is most likely to raise short-term interest rates by 0.75%. While this is less than the 1% increase that many expected following the new 40-year high of inflation of 9.7% in June, it is still the fastest back-to-back increase of three-quarters of a percent or more since 1980, when the economy was wracked by double digit inflation.

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