Startling Unemployment, Whopping Interest Rates, And Painful Cost of Living

Todd Moses
June 14, 2024

According to data from the Department of Labor, California unemployment benefit claims have hit 90,000 in two weeks.

Inputs that matter: Weekly unemployment claims are seen as a proxy for the number of U.S. layoffs in a given week and a sign of the job market's direction.

  • California is expected to see average job growth of about 13,000 a month this year.
  • Still, the Center for Jobs and the Economy pointed out that the first quarter data lags behind that forecast.
  • Meanwhile, the number of Americans filing for jobless benefits jumped to the highest in 10 months last week.

The opportunity: "An increase in claims may indicate that those losing their jobs are filing for benefits because they are finding it more difficult to get new jobs," said Nancy Vanden Houten, lead U.S. economist of Oxford Economics.

  • The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March 2022 in an attempt to contain the four-decade-high inflation.

Zoom in: Many economists had expected the rapid rate hikes to trigger a recession, but thanks to strong consumer demand, that has been avoided so far.

  • U.S. Treasury yields fell again on Friday as data released this week pointed to easing inflation.
  • On Wednesday, the Fed opted to hold rates steady at 5.25%-5.50%, indicating that there would be just one cut this year.

Between the lines: The Red Sea crisis and bursts of regional port congestion continue to present problems to container trades, while the looming threat of tit-for-tat tariff wars was causing demand spikes, Xeneta chief analyst Peter Sand told delegates.

  • "When the Red Sea crisis hit, we had overcapacity."
  • "It's worth looking at carriers' vessel costs – time-charter rates are up by 100% since mid-December, and hire periods are getting longer, so clearly neither carriers nor owners see any resolution," Sand explains.

Follow the money: To put the economy in perspective, individuals in the top 11 most expensive states in the U.S. need an annual income exceeding $100,000 to live comfortably.

  • In this case, "comfortable" was defined as the annual income required to cover a 50/30/20 budget, allocating 50% of earnings to necessities such as housing and utility costs, 30% to discretionary spending, and 20% to savings or investments.

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