Thursday’s jobless claims number was higher than forecasters’ expectations of 348,000 new claims. The figure is way higher than the week before, which featured 368,000 filings.
The numbers come after this month’s release of the June jobs report, which surpassed expectations with 850,000 new jobs added in June, although the unemployment rate grew from 5.8% to 5.9%.
"The unexpected bump in claims could be noise in the system, but it’s also not hard to see how the rise of the COVID-19 delta variant could add thousands of layoffs to numbers that already are double what they were pre-COVID. We should keep a close watch on COVID-19-related layoffs in this 'fourth wave,'" explained Robert Frick, corporate economist at Navy Federal Credit Union.
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The delta variant of COVID-19 is likewise on the rise. The Centers for Disease Control and Prevention announced this week that the variant, which is more efficiently transmissible than different strains, now accounts for 83% of infections. COVID-19 infections are up 195% over the past two weeks, yet, unvaccinated people comprise the majority of the newest uptick.
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Some economists have further shown concerns that the labor market is being held back by amped-up federal unemployment benefits. Twenty-six states have opted out of the program early, citing fear that it was incentivizing people, particularly those in the leisure and hospitality industry, to stay at home and get the benefits rather than find work.
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Another worry about the recovering economy is that of inflation, which has been firmly increasing as pent-up demand continues and the economy remains flush with federal spending. The Department of Labor stated that consumer prices rose 5.4% for the year ending June, the highest rate of inflation since 2008. The numbers blew past consensus predictions of 4.9%.
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Treasury Secretary Janet Yellen recently announced that she doesn’t believe the higher costs will be permanent though warned it could stick around for a bit.
“I think we will have several more months of rapid inflation,” Yellen explained. “So I’m not saying this is a one-month phenomenon, but I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it.”
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Even with the labor market and inflation, many investors are still bullish on future economic growth. Earlier this week, Bill Ackman, founder and CEO of Pershing Square Capital Management, prophesied a “massive” economic boom and brushed away concerns regarding the delta variant of COVID-19 turning the economy back around.