GDP growth is expected to accelerate to 3.2% for the first quarter of 2023
According to the Labor Department, jobless claims increased slightly, rising by 7,000 to a total of 198,000 for the week ending March 25. This number is slightly above the estimated 195,000 claims but is still relatively low, indicating that companies are reluctant to lay off workers despite projections of rising unemployment rates throughout the year. The four-week moving average of weekly claims, which smooths out the data’s volatility, has remained below 200,000 since mid-January.
The Federal Reserve is targeting a labor market with a sharp supply-demand imbalance, where almost two open jobs are available for every available worker. However, it is expected that the unemployment rate will increase to 4.5% this year, and more than 540,000 jobs will be lost, according to an Atlanta Fed calculator.
While economic conditions are unlikely to collapse entirely, newly laid-off workers may not be quickly rehired as businesses evaluate their plans to weather a mild recession in the second half of the year. Additionally, the final Commerce Department report for gross domestic product showed a slightly lower annualized rate of 2.6% in the fourth quarter due to downward revisions in consumer spending and exports. Despite this, GDP growth is expected to accelerate to 3.2% for the first quarter of 2023, according to the Atlanta Fed’s GDPNow tracker. Despite these developments, markets remain unaffected, with futures indicating a higher open on Wall Street.