Rising Jobless Claims Signal Slowing Economy, Overshadow Inflation Concerns
Initial jobless claims jumped to 263,000 last week, marking the highest level in nearly four years and raising fresh concerns about a potential economic slowdown.
Despite August’s Consumer Price Index (CPI) coming in slightly above expectations — with headline inflation at 2.9% and core inflation at 3.1%, both above the Federal Reserve’s 2% target — markets shifted their focus to the labor market. Weekly claims exceeded forecasts of 235,000 and climbed sharply from 236,000 the prior week, highlighting emerging weakness in the U.S. employment picture. The spike in claims helped push the 10-year Treasury yield down five basis points to below 4%, reflecting growing investor caution.
Crypto markets initially reacted to the higher inflation data with modest dips but quickly rebounded as employment figures captured attention. Bitcoin (BTC) and Ether (ETH) posted small gains, while altcoins outperformed: Solana (SOL) rose 11% week-over-week to a multi-month high, Dogecoin (DOGE) gained 17%, and XRP jumped 6.6%, reclaiming the $3 mark.
Economists note that the U.S. now faces a challenging scenario: stagflation, where high inflation coincides with slowing growth. Monetary policy becomes a balancing act — cutting interest rates to stimulate growth risks worsening inflation, while leaving rates unchanged could exacerbate the economic slowdown.
Traders are currently betting on the Federal Reserve leaning toward growth support, with markets pricing in a near-certain rate cut next week. “It’s going to be a rough few months ahead as tariffs’ effects ripple through the economy,” said Heather Long, chief economist at Navy Federal Credit Union. “Americans can expect higher prices and likely more layoffs.”
