The number of new applications for jobless aid budged little during the first week of May, according to data released Thursday by the Labor Department.

In the week ending May 7, initial claims for unemployment insurance totaled 203,000 after season adjustments, 1,000 more than than the previous week’s revised level. The four-week moving average of weekly jobless claims ticked 4,250 claims higher to 192,750.


Jobless claims have remained at or below pre-pandemic levels for months as businesses avoid laying off workers in historically high demand. There were roughly two open jobs for every unemployed American in March, according to data released by the Labor Department last week, and businesses have avoided laying off current staff with workers in short supply.

The U.S. labor market has recovered rapidly from the onset of the pandemic more than two years ago, which claimed 21 million jobs and caused the steepest decline in the U.S. economy since the Great Depression. The economy has recovered all but roughly 1.2 million jobs lost in 2020, returned to its pre-pandemic growth path and has recovered far quicker than most experts expected.

The strength of the labor market, however, faces serious threats from surging inflation driven in part by the labor shortage and a wide range of other pandemic-related factors.

The Federal Reserve is attempting to raise interest rates fast enough to curb inflation by reducing the demand for goods and services in short supply, but slow enough to prevent businesses from shedding workers under the weight of higher borrowing costs and smaller profit margins. Fed Chair Jerome Powell acknowledged last week it would be “very difficult” to curb inflation without causing a broader economic slowdown.

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New consumer price index (CPI) data showed inflation slowing down on the whole, but the climb down from the peak will be grueling.

Inflation may have finally peaked after more than a year of supply chain snarls, labor shortages and a flood of stimulus driving prices higher.

But the climb down from the highest levels of inflation in four decades will be tough, economists say, posing political challenges for the Biden administration, a careful balancing act for the Federal Reserve and a financial crunch for millions of U.S. families.

Consumer prices rose 8.3 percent over the 12 months ending in April, according to the Labor Department’s consumer price index (CPI), down slightly from an annual inflation rate of 8.5 percent in March.


The drop was almost entirely driven by gasoline prices falling from a March spike driven by the Russian invasion of Ukraine.

“We think that March 2022 will have marked the peak for annual inflation,” wrote James Knightley, chief international economist at ING, in a Wednesday analysis.

Even so, the road ahead is laden with obstacles likely to keep prices for crucial goods and services rising deeper into the year, Knightly said.

Sylvan explains here.

DIGGING INTO THE NUMBERS

Inflation slowed from an 8.5 percent annual rate in March and a whopping 1.2 percent month-over-month rise as gas and oil prices declined from a peak driven by the war in Ukraine.

Gasoline prices dropped 6.7 percent in April and energy prices on the whole dropped 2.7 percent last month after double-digit gains in March. Gas prices are still up 44.7 percent over the past 12 months, and energy prices remain 30.3 percent higher than they were in April 2021.

While a dip in gas prices brought some relief for consumers, inflation in other crucial goods and services continued to rise. Rising prices for food, shelter, airline fares and new vehicles were the biggest contributors to overall inflation in April, the Bureau of Labor Statistics said.

Inflation for goods other than food and energy, which economists call “core inflation,” also rose 0.6 percent in April after a 0.3 monthly increase in March.

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Russian inflation jumps to 17.83% in April, highest since early 2002