On Thursday, the U.S. Labor Department released information regarding the number of Americans who applied for unemployment benefits. This information is important as it helps learn more about the states of affairs in the U.S. economy.
According to the Labor Department, the number of Americans who applied reached 252,000 for the week ended on December 7. Unemployment benefits increased by 49,000 in comparison with the previous week. This is the worst result in more than two years. Moreover, the increase was the largest since August 2017.
It is important to mention that jobless claims fell to the lowest level during the previous week. One of the major factors which influenced the labor market was a late Thanksgiving Day compared to 2018. Claims data is more volatile after Thanksgiving Day.
Economists expected that claims would reach 213,000 in the last week.
Let’s have a look at the four-week moving average of initial claims. This way, it will be easier to learn more about trends. Based on this information, jobless claims increased by 6,250 to 224,000 last week. The primary trend in claims remains consistent with a strong labor market.
According to the U.S. government, the economy added 266,000 jobs in November. The unemployment rate declined by 3.5%, which is the lowest level in nearly half a century. Thanks to the strong labor market, consumer spending is also on the rise. As a result, the economy is growing despite all of the problems. This is important as trade war with China created additional pressure on the economy along with slowing global growth.
Trade war and economy
The global economy is slowing down. The trade war between the two largest economies in the world is a severe challenge to the U.S economy.
Hopefully, there is a chance that the U.S. and China may avoid another round of tariffs. On Thursday, several sources familiar with the negotiations process stated that the Trump administration reached a trade deal in principle. Currently, it is pending approval from President Donald Trump.
Trump met with top advisors on Thursday to discuss the upcoming trade deal with China. They also discussed whether to delay the next round of U.S. tariffs.
Based on the information, the White House is ready to scrap those duties. Moreover, they will reduce some existing tariffs in half as part of the agreement. The U.S. proposed cutting current duties in half from $360 billion to $180 billion.
In return, China should purchase U.S. agricultural products. China committed to buying about $40 billion in goods. President Trump wanted the figure closer to $50 billion. On Thursday, he used his Twitter account to announce an upcoming trade deal with China.
The same day, he also met with several CEOs. He had a meeting with the CEO of Cummins, as well as the CEO of Union Pacific, etc. It remains unknown if Trump discussed a trade deal with China during this meeting.
The U.S. has the largest economy in the world. However, even for the U.S., an unresolved trade war is a threat to its economy. U.S. and China should work together to boost the global economy.