The Labor Department revealed an increase in the number of Americans applying for unemployment benefits, despite historically high interest rates. It was reported that jobless claims went up by 2,000 to a total of 205,000 in the week that ended Dec. 16. The four-week average of such claims fell by 1,500, standing at 212,000. At that time, around 1.87 million Americans were collecting jobless benefits.

The Federal Reserve initiated a rate increase last year to manage inflation which soared from a robust economic recovery post the COVID-19 recession in 2020. There have been 11 increases to the benchmark rate since March 2022 but inflation has shown signs of decreasing. The Fed has abstained from making changes at the most recent meetings and now predicts it will reverse policies and bring down rates thrice in the next year. The economies of the US have displayed resilience, despite concerns of the country entering a recession following the rate hikes. Unemployment rates have remained under 4% for 22 consecutive months, a phenomenon last seen in the 1960s. Thus, the combination of slowing inflation and low unemployment has fuelled hopes about the Fed successfully having a soft landing without instigating a recession.