CareCredit - Women's Health April 2024

Unemployment Claims Fall Even as Labor Market Cools

unemployment

Initial U.S. unemployment claims last week saw the largest drop since June.

That’s according to figures released Wednesday (Nov. 22) by the Labor Department, showing initial claims for the week ending Nov. 18 falling 24,000 to 209,000.

Meanwhile, continuing claims, typically seen as a signifier for the number of Americans getting ongoing unemployment income, fell for the first time in two months to 1.84 million.

A report by Bloomberg News says the numbers indicate employers are still retaining their workers even as the labor market cools.

“Atypical retention of workers ahead of the Thanksgiving holiday explains the drop in seasonally adjusted jobless claims,” said Bloomberg economist Stuart Paul.

“Smoothing over the weekly volatility, the rising trend in continuing claims suggests unemployed workers are finding it increasingly difficult to land new jobs.”

Figures released last week by the department showed continuing applications for unemployment benefits reaching their highest level in nearly two years, while initial claims — a proxy for layoffs — climbed 13,000 to 231,000.

This is happening — as PYMNTS wrote recently — as American households are showing signs of weakness following years of inflation levels exceeding 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 driven by lower-income consumers, although one recent PYMNTS Intelligence study found that 85% of U.S. consumers feel that their wages have not kept up with inflation, with most of them saying persistent high prices worsen daily life.

These pressures are forcing consumers to embrace new shopping tactics for this year’s holiday season, with a growing number of Americans moving away from credit.

Recent research from PYMNTS Intelligence and Lending Club shows that 32% of shoppers expect to use at least one credit option for their holiday shopping, down from 37% in 2022.

“This decrease indicates a growing inclination toward more cautious spending habits. Among the credit options, credit card financing remains the most popular, with 27% of shoppers planning to use credit cards for their holiday purchases,” PYMNTS wrote earlier this week. “Additionally, buy now, pay later (BNPL) options have gained traction, especially among younger consumers, with 20% planning to use this financing method.”