September 24, 2023

Number: The number of Americans applying for unemployment benefits fell by 242,000 in mid-May, aided by efforts to combat a recent spike in fraudulent claims in Massachusetts.

The Labor Department said Thursday that new jobless claims declined by 264,000 in the previous week. Figures are seasonally adjusted.

The best barometer of whether the economy is getting better or worse is the number of people applying for unemployment benefits.

New jobless claims rose from less than 200,000 in January, a sign that the labor market is cooling. The problems in Massachusetts do not change the underlying trend.

Main details: Thirty-five of the 53 US states and territories that reported jobless claims showed a decrease in the week ending May 15. Eighteen have registered an increase.

The biggest decline was in Massachusetts, which is battling a surge in bogus applications, New filings in the state sank to 20,901 from 14,042, based on actual or unadjusted data.

Just a week ago, a spike in Massachusetts filings pushed new US jobless claims to their highest since late 2021.

However, new unemployment applications still appear to be abnormally high in the state. Massachusetts reported the second highest number of new claims after California, another state that suffers from extreme fraud.

New claims in Massachusetts easily outpaced Texas and New York, two states with higher numbers of workers.

In contrast, Massachusetts ranks 13th among states in the total number of employees.

Meanwhile, the number of people seeking unemployment benefits in the US fell by 8,000 to 1.8 million in the week ended May 6.

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The gradual increase in these so-called continuation claims over the past year suggests that people who have lost their jobs are taking longer to find new ones.

big picture: Unemployment claims are slowly rising above historically low levels, but not by enough to signal that a recession is on the way. The economy has slowed largely due to high interest rates run by the Federal Reserve to tame high US inflation.

Wall Street is watching unemployment claims closely because it is one of the first indicators to flash red when the economy is headed for trouble.

looking ahead: “Businesses have been extremely reticent over the past two years as they struggle to find workers, but it is increasingly clear that they will not be able to hold on to everyone indefinitely,” said Thomas Simons, US economist at Jefferies.

Market Feedback: Dow Jones Industrial Average DJIA,
and the S&P 500 SPX,
There was a decline in Thursday’s trading.