The US economy shows signs of slowing down because jobless claims increased more than expected while corporate profits suffered a significant decrease during the first quarter of the year. The economy faces cooling signs alongside growing uncertainty from trade policy changes and tariffs implementation.
The Labor Department published data showing state unemployment benefits rose by 14,000 to reach 240,000 during the period from May 24 to May 31. The actual number of claims exceeded the predicted 230,000. The unadjusted figures showed Michigan as the top contributor to the increase because it contains significant auto assembly operations.
According to Christopher Rupkey of FWDBONDS the economic situation is becoming worse. The growing number of layoffs indicates that future economic difficulties could emerge.
Unemployment benefit recipients in America reached their highest point since mid-2018 during the week of May 17. The first-quarter data revealed U.S. corporate profits declined significantly while businesses faced rising production costs and unstable trade relationships.
The worsening labor market data emerged at the same time when U.S. trade courts issued a decision that eliminated most of President Donald Trump’s extensive tariffs system. The ruling provides limited relief to certain companies but creates additional policy uncertainty for all businesses.
Most employers have kept their workforce intact after the pandemic yet economic challenges now appear to cause rising layoffs throughout trade-dependent industries.
The Bank of America Institute reported that unemployment benefits increased among upper-income households during the period from February to April while data from deposit accounts revealed benefits growth across every income level. The seasonal adjustment challenges will cause jobless claims to surpass their normal range of 205,000–243,000 in June according to economist predictions.
The Federal Reserve published minutes on Wednesday which showed increasing worry among policymakers. The job market faces substantial uncertainty according to Fed policymakers because trade policy together with government actions create negative job market possibilities.
Since December the Federal Reserve has maintained interest rates at a stable level yet the path forward remains uncertain because of inflation risks caused by tariffs and signs that the economy is slowing down.
U.S. stock prices increased during the morning trading session while Treasury bond yields decreased and the dollar value decreased after an initial rise.
