WASHINGTON (AP) — The number of Americans applying for unemployment benefits remained stable last week, indicating some steadiness in the job market. According to the U.S. Labor Department, jobless claims dipped slightly by 1,000, bringing the total to 219,000 for the week ending December 21. This figure was lower than the 223,000 anticipated by analysts.
Meanwhile, the trend for continuing claims showed a different story; it rose significantly by 46,000, bringing the total to 1.91 million for the week of December 14. This increase marks the highest level of continuing claims since the week of November 13, 2021, indicating potential concerns over persistent unemployment. The four-week average, often seen as a more reliable indicator due to its smoothing effect on weekly volatility, increased by 1,000 to 226,500.
Such numbers are widely regarded as reflective of the layoffs occurring within the U.S. workforce. The stability shown by the jobless benefits applications suggests resilience within the job market amid various economic pressures.
At the same time, another pressing economic issue looms large — household debt. According to Pornchai Thiraveja, the director-general of the Fiscal Policy Office, household debt reached alarming levels, constituting 89.6% of the Gross Domestic Product (GDP) as of the second quarter of 2024. Though this rate is slightly down from 90.7% reported in the previous quarter, it still raises concerns among policymakers who fear this trend might represent a ticking time bomb for economic stability.
The Bank for International Settlements warned of potential long-term impacts due to elevated household debt levels. Their study highlighted the greater negative impacts on economic growth when debt surpasses recommended levels, rendering any short-term benefits from increased consumption unreliable over time.
Addressing this concern, the Finance Ministry implemented the "You Fight, We Help" debt relief programme, offering three years of suspended interest payments, allowing the government to absorb those costs. This initiative aims to mitigate the immediate debt burden on households.
Despite the high levels of household debt, Thiraveja emphasized the structure of this debt indicates it is primarily directed toward wealth accumulation. More than 66.5% of household debt is utilized for purchasing assets such as real estate (34.1%), vehicles (10.6%), and supporting business activities (17.6%). Part of the debt also funds education (4.1%), underscoring its connection to future income generation.
The implication of these trends is significant, as nearly half of household debt (44.7%) consists of secured debt — mortgages and car loans, for example. This suggests many households are taking on debt to acquire assets rather than for short-term consumption, which can lead to greater financial stability over time.
Looking toward the future, Thiraveja expressed optimism about the potential decrease of household debt levels as he anticipates tightened lending standards from financial institutions, particularly for housing and vehicle loans, by 2025. Such measures could help manage the risks associated with high household debt and improve economic health.
Connecting the dots, the current status of jobless claims and household debt presents a complex picture of the U.S. economy. While stable unemployment metrics provide some reassurance, the increasing household debt levels warrant close scrutiny as they may have far-reaching consequences for not only individual families but also the economy as a whole.
