Jobless claims rise, perhaps as side effect of inflation

Jobless claims rose last week slightly higher than experts expected.

While the American labor market is still growing, it appears that inflation may be causing employment growth to slow and layoffs to rise, with some notable exceptions. 

In other words, the job cross currents continue running through the economy, sending mixed signals about the condition of the market

"We've created nearly 700,000 manufacturing jobs just in the last 19 months. Businesses are investing in America," said President Joe Biden.

But, beyond hiking interest rates, part of the Federal Reserve's plan to fight persistent inflation and cool the economy, is to weaken the labor market so that normal growth can get back on track. 

"We don't know… whether this process will lead to a recession or, if so, how significant that recession would be," said Federal Reserve Chairman Jerome Powell.

Mega employers such and Salesforce, Oracle, Google and Meta have either laid people off or announced hiring freezes. As a result, many tech recruiters are being shown the door. Employees in mortgages, real estate and home building firms continue to undergo layoffs.

Is this just the normal job churn at mega-corporations, or an indicator that inflation is eroding once bulletproof companies? 

"[These are] indications of an economic slowdown; hiring freezes, some layoffs in white-collar jobs." said employment lawyer and former EDD Director Michael Bernick.

Oddly, direct service jobs such as supporting the elderly and disabled at home or in care centers, as well as small businesses, home repair, and retail go untaken. 

"Wages have gone up. Even with these wage increases, employers can't find workers," said Bernick.

In fact, with virtually all government pandemic worker subsidies long gone, there are still more than 10 million job postings nationwide, far higher than pre-pandemic days. "Workers are slowly coming back, but it's still well below prior to the pandemic and I can't understand why, Most people I talk to can't understand why," said Bernick.

Of those actually working, resistance to permanently returning to the office is high, especially in San Francisco. "We're still below 35% of occupancy today and on many days below 30%," said Bernick.

At 8.2% the U.S. inflation rate was down a bit, below the overall European rate, but higher than other major nations such as China, Japan, South Korea, Canada and India.