Americans filing new claims for unemployment benefits surged to a 1-1/2-year high of 264,000 last week, indicating cracks in the labor market as demand slows. This could give the Federal Reserve room to halt further interest rate increases next month.
Reuters reported that with demand cooling, inflation pressures are subsiding. Data from the Labor Department showed that producer prices rebounded modestly in April and resulted in an annual increase of 2.3%—the smallest wholesale inflation rate seen over two years—on Thursday. These reports were consistent with economists’ expectations of a recession by year-end according to Reuters sources such as Christopher Rupkey, chief economist at FWDBONDS in New York who said “The Fed looks closer to winning the war on inflation today but risks losing its battle against keeping economy afloat and away from recessionary shoals.”
