American economy improves and unemployment claims fall

Fed Chairman Jerome Powell stated in an interview that he assesses the current situation positively, as there is no “cracks” in the job market that is in “good shape” and adding that “the extreme imbalances we saw early in the pandemic recovery have mostly been resolved”.

Even though the wave of layoffs between November 2023 and January 2024 occurred, mainly affecting technology companies, the job market is now resilient, allowing interest rates, raised to 5.25% and 5.50 in July 2023 to correct inflation, remain to avoid the return of deregulations in the economy, although it is expected that such rates will fall by the end of the year.

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_{Queue of people looking for jobs (Photo: reproduction/Getty Images Embed)}

Inflation and interest rates

Inflation has been a concern for the American economy since 2020 due to the pandemic, with these first months of 2024 being a breather for the American economy as it returns to numbers representing an increasingly healthier economy.

Among them is the analysis of the last 12 months up to February in relation to the fluctuation of import prices during this period: prices fell 0.8% after falling 1.3% in January, while the price of all imports, excluding fuel and food fell by around 0.7%; Fuel prices, in turn, rose 1.8% in February, while food prices increased 1.1%. These numbers demonstrate how the average cost of living in the USA has fallen compared to the same period last year.

The FED and the financial market

One of the actions taken by the FED (Federal Reserve, the Central Bank of the USA) to control the growing inflation in the country was to increase the interest rate to the range of 5.25% and 5.5%. However, this directly affects the cost of loans, generating pressure from financial markets for the FED to lower interest rates. However, with the American economy improving in recent months and based on what was said at its last meeting, the institution’s vision is that this is a time for “caution”, since changing interest rates now could hinder the entire economic recovery process, especially in an election year.

Featured photo: sign saying “hiring now” in the USA (reproduction/Ernie Journeys/Unsplash)