Unemployment aid requests in the United States have alarmingly increased over the last two months, fueling concerns about a potential recession in the country’s job market.
For the week ending on February 3, 2024, initial unemployment aid claims totaled 239,000, an increase of 13,000 from the previous week.
Continued claims for unemployment benefits rose to 1.9 million, representing the total number of Americans receiving the benefit.
Increase in the number of unemployment aid requests in the US
The American market has been going through a difficult phase since 2023, mainly influenced by high interest rates.
Despite the number of people leaving work being lower than at the peak of the pandemic recovery, the US labor market is still experiencing a significant impact from the economy.
In February 2024, unemployment aid requests in the US reached historic levels, the highest in the last two months. Additionally, several companies are announcing job cuts, such as the United States Parcel Service Inc. (UPS), which announced it will lay off 12,000 employees.
Among the most affected US states, California, New York, and Oregon recorded the highest increase in initial unemployment aid requests.
Regarding the sectors most affected by the increase in unemployment subsidy claims, technology, retail, and construction have been hit the hardest. The world’s largest technology companies, Amazon, Meta, and Netflix, recently announced mass layoffs.
What are the reasons for the crisis in the American job market?
The increase in unemployment aid requests in the US is mainly due to:
- Higher interest rates: the Federal Reserve raised interest rates several times last year to combat inflation, which may have led some companies to slow down hiring or even lay off employees.
- Global economic slowdown: the global economy is growing at a slower pace, which may be affecting the demand for US products and services.
Impact on the US economy
It’s not just the unemployed who are suffering the impacts of the job market crisis in the US. The news of the increase in unemployment aid requests negatively affected the American stock market. The S&P 500 index fell by 1.2% on Friday (February 3), while the Dow Jones Industrial Average dropped by 1.0%.
Moreover, the increase in unemployment aid requests, along with other weak economic indicators such as a decrease in GDP and a slowdown in industrial production, are raising concerns about a possible recession in the US.
What to expect?
Analysts are monitoring labor market data to assess whether the increase in unemployment aid requests is a sign of an imminent recession. It’s worth noting that the Federal Reserve is also closely watching these data, as they may influence the country’s monetary policy decisions.
Related data
- The unemployment rate in the US remained at 3.5% in December 2023
- The number of job vacancies in the US fell by 1.4 million in November 2023
- The US GDP grew at an annual pace of 2.9% in the third quarter of 2023
- Layoffs are not increasing, being below what economists expected
- Economists predict that US employers created about 185,000 job positions in the country in January 2024