Hours: Monday - Friday 8:00 am - 5:00 pm

Resources

Initial jobless claims remain low as consumer sentiment rises unexpectedly

REAL ECONOMY BLOG | April 14, 2022

Authored by RSM US LLP


Initial jobless claims last week rose to 185,000 yet remained significantly below the pre-pandemic level as the tight labor market discouraged layoffs, the Labor Department reported on Thursday.

Our preferred measure for new filings for unemployment benefits—the 13-week moving average—continued to trend lower given the persistent labor shortages while demand for workers stayed robust.

A flattening or even a reversal in the layoff trend, though, is lurking as the Federal Reserve continues to clamp down on inflation. That would certainly unwind some of the labor shortage issues as demand slows.

Initial jobless claims

Better employment opportunities are also one of the factors that drove consumer sentiment to increase unexpectedly to 65.7 in April from 59.4 in March, according to the University of Michigan in a separate survey.

But the main catalyst was the drop in oil and gasoline prices since early March, which are well-known for their correlation with the survey’s outcome. The subindex for gasoline prices in the next 12 months plunged to 22.6 in April after spiking to 50.2 in March.

The survey also gauges inflation expectations in the near and longer terms. Both stayed unchanged in April with the 12-month expectation at 5.4% and the five- to 10-year expectation at 3.0%.

Consumer confidence

Confidence over the government’s ability to fight inflation picked up on the month, likely linked to the Federal Reserve’s recent rate hike and the Biden administration’s release of oil from the Strategic Petroleum Reserve to lessen the impact from rising gasoline and oil prices.

Still, better sentiment does not translate into more spending. Appetites for purchases of major household items and vehicles in the next six months dropped in April, while buying intentions for new homes inched up.

The takeaway

With the high level of uncertainty surrounding inflation, the Fed’s more hawkish policy and geopolitical tensions, the road ahead will be quite bumpy before we can grasp the big picture of the economy through jobless claims and consumer sentiments.

Inflation expectations

Let's Talk!

Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Tuan Nguyen and originally appeared on 2022-04-14.
2022 RSM US LLP. All rights reserved.
https://realeconomy.rsmus.com/initial-jobless-claims-remain-low-as-consumer-sentiment-rises-unexpectedly/

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how Condley and Company can assist you, please call (325) 677-6251.

Share This