US jobless claims reach highest level since October 2021, signaling cooling labor market.

The number of Americans filing for unemployment benefits last week surged to the highest level since 2021, indicating a cooling off of the historically tight labor market in the face of rising interest rates. Although hiring rose faster than expected in April, layoffs are on the rise and job openings are declining. Economists widely expect unemployment to climb higher as a result of steeper interest rates, which could force consumers and businesses to pull back on spending. The Fed expects unemployment to rise to 4.6% by the end of next year, up from the current rate of 3.5%.