Applications for Unemployment Benefits Rise Again
Seekers of unemployment benefits rose by 15,000 for the week ending September 14, reaching 309,000, but reporting delays have distorted data for the second consecutive week. The four week average dipped to 314,750, down 7,000, to a nearly six-year low. Applications data was severely skewed beginning in the week ending September 7 as both California and Nevada were unable to report data due to computer upgrades and continue to struggle with backlogged data.
Despite the information delays, trends for applications have been positive and layoffs have been fewer. The four week average, during the two months before the distorted data, showed layoffs to be down 6 percent, though companies continue to hire at a sluggish pace. On average, employers have added 155,000 jobs per month since April, down from 205,000 during the first quarter of the year.
As a result, the Federal Reserve chose to continue its bond buying practices of which it has planned to slowly end as the economy improves. It currently purchases $85 billion in bonds per month. This practice has kept mortgage and other long-term interest rates artificially low in order to encourage more borrowing and spending.
During Q2 2013, the economy grew at an annual rate of 2.5 percent. A modest growth too slow to generate the strong hiring necessary to lower the unemployment rate, which is currently at 7.3 percent. Current forecasts put growth at no more than 2 percent for Q3 as consumer spending has declined. Higher interest rates have also acted to slow the housing recovery.