Initial jobless claims last week continued to trend down toward the pre-pandemic level after a period of temporary increases because of the omicron variant.
New filings for the week ending Feb. 19 dropped to 232,000 from 249,000 in the prior week, only 14,000 claims away from the 2019 average.
The current labor market shares a lot of similarities with the 2019 labor market, when the supply of workers remained tight as the economy reached full employment. As a result, initial claims—a proxy for layoffs—in recent months have stayed close to the 2019 level.
Continuing claims also fell last week, down to 1.476 million from 1.593 million in the prior week.
The risks to the American economy from the Russian invasion of Ukraine, while limited in the short term, will certainly put pressure on economic activities and inflation, especially as oil prices in the U.S. approach $100 per barrel. That increase will in turn spill over to the labor market.
If the invasion prolongs, the impact will be far more significant across the Atlantic Ocean, potentially shaving off a little less than 1% from gross domestic product this year while pushing inflation above 10% on a year-over-year basis.
The uncertainty because of such shocks is causing the equity markets to move deep into correction territory, likely putting some pressure on the job market moving forward.