Unemployment Lines Are Shorter Than Any Time Since The 1960s

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Business has been slow lately if you happen to work at a state unemployment office.

Only 194,000 people filed for unemployment last week, down from 200,000 the week before, the Department of Labor said Thursday.1 Over the last four weeks, claims have averaged 197,750, tied with a stretch in 2022 for the lowest level since 1969. It also marks the first six-week period since 1969 that fewer than 200,000 people have filed claims, a statistic all the more remarkable because the workforce has more than doubled since then.

Economists have described the current labor market as a “low-hire, low-fire” environment, and Thursday’s statistics emphasized the latter half of the equation.

Employers have been reluctant to either expand or reduce their workforces amid uncertainty about the war in Iran, trade policy, and a crackdown on immigration that has reduced the number of available workers. The job market is both stable and stagnant, leaving people with jobs relatively secure in them, and job-seekers facing an uphill battle.

Low unemployment is a bright spot for the economy, which is being kept afloat by worker paychecks fueling consumer spending.

“Americans are clinging to their jobs—and most companies are clinging to their workers,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary.

What’s more, forecasters at Oxford Economics expect unemployment to stay low or go even lower in the coming months, given that the trend is spread across 70% of states.

The stable labor market has implications for the Federal Reserve officials, who are debating whether to continue raising the central bank’s benchmark interest rate.

They’re looking to force down inflation that’s stubbornly above the Fed’s target of a 2% annual rate. The Fed has a dual mandate from Congress to keep both inflation and unemployment low. With unemployment claims at their lowest in decades, the Fed has more breathing room to focus on the inflation fight. That could well mean a higher fed funds rate and higher borrowing costs on all kinds of loans.

“The continued stability in the labor market allows the Fed to place greater emphasis on the inflation side of its dual mandate,” Jay Hawkins, senior economist at PNC, wrote in a commentary.