Unemployment Aid Applications Back on the Rise
While unemployment aid applications still hover at five-year lows, those seeking benefits for the week ending May 25 rose by 10,000 to reach a seasonally adjusted 354,000. According to the U.S. Department of Labor, the weekly rise increased the four-week average by 6,750 to 347,250; the third consecutive increase. Weekly applications have fallen almost 7 percent since last November and were at a five-year low 338,000 in early May.
Hiring has also improved over the past six months as employers have added 208,000 per month, on average, up from an average of 138,000 for the prior six month period. The unemployment rate has also sunk to a four-year low hitting 7.5 percent, though some of the falling unemployment is due to people dropping out of the labor force. For the week ending May 11, almost 4.6 million Americans received unemployment benefits, down 25 percent from a year earlier.
It has also recently been reported that the economy grew at a pace of 2.4 percent during Q1 2013, just shy of the 2.5 percent projections for the period and well above the 0.4 percent pace during Q4 2012. Still, economists expect growth to contract to about 2 percent during Q2 due to consumer adjustments to tax increases and federal spending cuts. However, home prices continue to surge and consumer confidence is on the rise, potentially encouraging more spending.
As the economy improve, some have speculated that the Fed will begin to wind down its bond-buying program, which sees the federal government purchasing $85 billion in bonds in order to lowest interests rates and encourage borrowing and spending. The Fed, however, repudiates the idea arguing that it is too soon to close down the program and that significant improvement in employment numbers will be necessary before such considerations are taking seriously.