Jobless claims spike to 242,000. What it means for US economy

The latest jobless claims data from the US Department of Labor revealed a hotter-than-expected figure for the week ending June 8, 2024. The report indicated a 242,000 rise in jobless claims — indicated by filings for unemployment benefits — surpassing previous projections of 225,000.

Yahoo Finance's Rachelle Akuffo breaks down the details, shedding light on the implications of this jobless claims figure for the broader state of the labor market.

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This post was written by Angel Smith

Video Transcript

More Americans made initial claims for unemployment benefits last week than economists were expecting, with 24 242,000 people filing 242,000 people filed versus the 225,000 expected.

What does this tell us about the state of the economy to explain?

We have our very own Michelle Apo Hey Rochelle.

Hey, Brad.

So, as you mentioned there, that weekly headline number from the Labour Department showed that initial jobless claims, or that's the number of new filers for unemployment benefits that hit 242,000 for the week ending June 8th.

Now that's up 13,000 from the previous week.

And it did top expectations now insured employment or otherwise known as continuing jobless claims for those already receiving unemployment benefits that also rose 30,000 to 1.82 million for the week ending June 1st.

So as we dig into this, though, when it's coupled with a rising unemployment rate of 4% it does signal that more people are returning to the workforce.

But they're not finding a job, and this is part of the reason that polls show this disconnect between how well the economy is doing.

While it's increasingly harder for people to find jobs now, weekly jobless claims data can be very volatile.

Think of things like holidays in between shortened trading weeks and things like that.

So economists do prefer to use the moving four week average.

But even with that in mind, that also hit the highest level since September at 227,000, with the increase of 4750.

So things trending downwards for Main Street here.

So, Rochelle, what should we take away from this data?

So as I mentioned, there's Main Street, which is obviously the the real people who are here, who are potentially not able to find work.

But then you also have Wall Street because higher jobless claims are generally a poor sign for the economy.

But the Federal Reserve is looking for more consistent cooling in the labour market before it cuts interest.

It's part of that picture there, and that's something investors have been eagerly awaiting.

With that in mind, that will make borrowing cheaper perhaps make mortgages a little bit cheaper as well.

But if you are looking for work, the report does also indicate where you might have a harder time finding a job when you look at the number of people filing.

So the list of states with the largest increases in initial claims ending June 8th.

That's actually topped by California, followed by Minnesota and Pennsylvania.

Now the largest decreases you saw in North Dakota, Missouri and Tennessee.

And, of course, when you look at the list of some of these states, those do include some key election battlegrounds.

When you think of that Main street, Wall Street disconnect and people thinking hearing all this commentary about the economy doing well, but they're not able to find jobs, it does sort of really paint some of the picture here as to how people feel they're doing in this economy.

Brad.

Yeah, I heard you mention my home state of Pennsylvania in there, Rochelle.

Thanks so much for the breakdown on this.

Appreciate it