Jobless Claims Surge as Markets Shift Focus from Inflation to Growth Risks
Initial jobless claims soared to 263,000 last week, the highest in nearly four years, signaling a cooling U.S. labor market and reviving concerns over economic slowdown.
While August’s Consumer Price Index (CPI) came in slightly above expectations — with headline inflation at 2.9% and core inflation at 3.1%, both above the Fed’s 2% target — investors were more focused on the rising jobless claims. The jump from 236,000 the previous week, surpassing the 235,000 forecast, suggests that labor market strength may be weakening. The news drove the 10-year Treasury yield down five basis points to below 4%, reflecting growing caution in financial markets.
Cryptocurrency markets reacted initially to the inflation data with modest declines but quickly rebounded as employment data dominated sentiment. Bitcoin (BTC) and Ether (ETH) posted moderate gains, while altcoins surged: Solana (SOL) gained 11% week-over-week, Dogecoin (DOGE) jumped 17%, and XRP advanced 6.6% to reclaim the $3 level.
Economists warn the U.S. economy may be edging toward stagflation — a rare condition where high inflation coincides with stagnating growth. Policy choices are challenging: cutting interest rates to stimulate growth risks exacerbating inflation, while maintaining rates could deepen the slowdown.
Traders currently expect the Federal Reserve to prioritize growth, pricing in a near-certain rate cut next week. “The next few months will be tough as tariff impacts ripple through the economy,” said Heather Long, chief economist at Navy Federal Credit Union. “Americans can expect rising prices and possibly more layoffs.”
