The “durable” job market economists had been touting all year now seems a bit softer.
New employment figures from the U.S. Labor Department released Thursday (Nov. 16) showed continuing applications for unemployment benefits rose to their highest level in nearly two years.
Recurring jobless claims reached 1.87 million for the week ending Nov. 4, the eighth consecutive week that figure climbed. Initial claims, typically seen as a stand-in for layoffs, were also up, at 231,000 as of last week, an increase of 13,000.
The release comes at a moment when — as noted here earlier this week — the economy of American households has begun showing signs of weakness after two continuous years of inflation levels rising above wages.
“Many individuals have depleted a significant portion of their savings to keep up with everyday expenses,” PYMNTS wrote.
“Furthermore, consumers have started cutting back on indulgent expenses such as travel or leisure events, and are exhibiting more conservative behavior in essential spending, seeking deals and discounts or swapping their usual retail stores for cheaper alternatives.
This trend is being led by lower-income consumers, though one recent study conducted by PYMNTS Intelligence shows that 85% of U.S. consumers feel that their wages have not kept pace with inflation, with most of them reporting that persistent high prices worsen daily life.
In addition, close to 60% of consumers live paycheck to paycheck, as shown in separate PYMNTS research, a figure that has remained stable in the last two years. These findings illustrate the financial constraints many households have been facing for some time.
However, the situation is even worse among low-income consumers (those who make under $50,000 per year), with more than three-quarters of this group living paycheck to paycheck.
“As a result, consumers have seen their purchasing power diminish and are adjusting their consumption habits in both essential and non-essential spending accordingly,” PYMNTS wrote.
Recent research shows consumers are now more willing to skip credit card payments or make partial payments, or forgo non-essential expenses, such as digital media subscriptions, leisure or travel, than they were one year ago. On average, 74% of consumers have cut back non-essential retail spending as compared to the prior year.
Meanwhile, consumers who are still employed are nonetheless picking up extra work. Among workers who live paycheck to paycheck, 35% of those who struggle to pay bills have an added source of income, as do 33% of those who don’t have trouble paying the bills.