The number of new applications for unemployment benefits rose by 20,000 to 243,000 last week, the highest number of claims in about 10 months, the Labor Department reported Thursday.

The increase could be a sign that the labor market is softening due to high interest rates by the Federal Reserve, which has been trying to weaken demand to drive down inflation.

Jobless claims are seen as a proxy for layoffs. If few people are claiming unemployment insurance, it suggests not many workers are getting laid off. So the uptick is notable, especially since claims have not been this high since September 2023.

“Net, the recession clouds have moved back in suddenly, literally, almost overnight, and the skies are darkening ominously with new job layoffs surging and the total number of jobless workers receiving unemployment benefits at a new 2024 high,” said Chris Rupkey, chief economist at FWDBONDS. “This is exactly what a recession looks like, and it will be a miracle if the economy misses one.”

The Fed has raised its interest rate target to 5.25% to 5.50%, the highest since the dot-com bubble at the turn of the century. The biggest question now is when the Fed will start cutting rates, with most investors expecting the first rate cut after years of tightening to come at the Fed’s September meeting.

Inflation, which peaked at about 9% in June 2022, has generally been falling, which is a good sign for the economy. Inflation fell to 3% for the year ending in June in the consumer price index, the Bureau of Labor Statistics reported last week, marking three months of disinflation.

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And despite the high interest rate environment, the overall labor market has remained above water.

The economy added 206,000 jobs in June, and the unemployment rate rose 0.1 percentage points to 4.1%, the Bureau of Labor Statistics recently reported. While the unemployment rate has been trending up a bit in recent months, 4.1% is still a historically low rate.

The number of housing starts ticked up in June despite pressure from high mortgage rates, reassuring news for an economy that has seen soaring housing prices and rents driven by a lack of supply.

Housing starts, the change in the number of new residential buildings that began construction, rose 3% from May to a seasonally adjusted annual rate of 1.35 million in June, according to a Wednesday morning report from the Census Bureau.

From June 2023, they increased by 4.4%.

For permits to build, which are seen as a proxy for future construction, the rate of new permits last month was 3.1% below the rate in June of last year.

As of this week, the average rate on a 30-year, fixed-rate mortgage was 6.8%, according to Mortgage News Daily, which tracks daily changes in rates. That is down from a recent peak of above 8%, although is still far higher than in the years prior to the pandemic.

At the peak of the pandemic, the Federal Reserve cut its interest rate target to near zero, and mortgage rates plunged to ultralow levels. At one point in early 2021, people were locking in 2.5% mortgages — the lowest level in postwar modern history.

The low rates prompted an explosion of homebuying and investment, generating a surge in home construction. But then, the dynamic began shifting fast when inflation increased and the Fed hiked interest rates in response, thus pushing mortgage rates to the highest level since the turn of the century.

New home sales fell 11.3% from April to a seasonally adjusted annual rate of 619,000, according to the most recent report from the Census Bureau. The number of new home sales is 16.5% lower than it was in May of last year.

Existing home sales in May slowed 0.7% to a seasonally adjusted annual rate of 4.11 million, the National Association of Realtors reported recently. The pace of existing home sales is down nearly 3% from the year before.

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Housing affordability has been a major concern for consumers. This week, President Joe Biden pushed for Congress to make it so corporate landlords have to cap rent increases on existing units at 5% or lose prized tax breaks.

The move has little chance of passing in a divided Congress but shows that addressing housing affordability is a priority during this election cycle.

If President Joe Biden, who is trailing in the polls, stays on the Democratic ticket, it could help energize the party’s fundraising at the House and Senate levels, some campaign strategists say.

The Democratic Party is facing upheaval over keeping Biden as the nominee heading into his rematch against former President Donald Trump. A growing number of Democrats are calling on the president to step aside in favor of a younger candidate who might have a better chance of beating Trump, but so far, Biden has remained steadfast, generating considerable uneasiness within the party.

However, some campaign strategists think that keeping Biden at the top of the ticket could result in more money pouring into Democratic coffers at the congressional level.

That is because some Democratic donors might see the presidency as more likely to swing to Trump, so they may turbocharge their funding for a Democratic firewall in the House to block Republicans from claiming a trifecta of power.

One longtime Democratic strategist who has worked on statewide and congressional races told the Washington Examiner that Democratic fundraisers at the congressional level are “jumping on the opportunity” to let voters know that regardless of what happens with the presidential race “it is really important that Democrats control at least one of the two chambers of Congress.”

“We always knew it was going to be a close election,” Rep. Don Beyer (D-VA) told Politico. “But if Trump prevails, it’s essential that we keep that House. We don’t want them to have a trifecta, which means picking up these four or five seats.”

Trump is polling nearly 3 percentage points better nationally than Biden, according to an aggregate of polls from RealClearPolitics. In battleground Pennsylvania, Trump is polling more than 5 points ahead of Biden. He is also outperforming the president in Michigan, Nevada, Arizona, and even Wisconsin — a state Republicans have only won once since 1984.

“Donald Trump is on track to win this election, and maybe win it by a landslide and take with him the Senate and the House,” Sen. Michael Bennet (D-CO) warned on CNN.

But Democrats are faring better at the House level.

The group RacetotheWH, which publishes forecasts for various races, puts Democrats’ odds of retaking the House at 57%, while simultaneously projecting Trump will best Biden if he stays on the ticket.

From the night of Biden’s June 27 debate to the end of the month, the Democratic Congressional Campaign Committee, whose main goal is to elect Democrats to the House, raised $1.3 million, according to numbers provided by the DCCC.

An event for House Democrats after the debate that featured House Minority Leader Hakeem Jeffries and former President Barack Obama netted an additional $3 million.

A possible scenario in House districts that are not very pro-Trump but that are still held by Republican incumbents is that voters there might write off the presidential race and assume Trump will win, so in turn, they might be more likely to vote Democratic in House races to ensure Democrats have a check on Trump, according to the strategist.

But it is also worth noting that while a weak Biden may energize fundraising, having an underperforming president at the head of the ticket could affect turnout, and thus have the opposite effect on performance at the polls.

The strategist emphasized that despite Biden’s lackluster debate performance and the subsequent fallout, the donor well at the national level likely will not dry up because “Democrats are fired up and understand the stakes of a Trump presidency.”

For instance, Biden campaign officials said there were 40,000 donations during the president’s highly anticipated press conference Thursday night.

But on Friday, the New York Times reported that donors have temporarily paused at least $90 million in pledged donations to Future Forward, a top super PAC supporting Biden’s reelection campaign.

Alex Conant, a GOP strategist and partner at Firehouse Strategies, told the Washington Examiner that in 2008, when he was press secretary of the Republican National Committee and Obama was facing then-Sen. John McCain, it became apparent that Obama was going to win a couple of weeks out from the election and resources were diverted to House and Senate candidates.

“I think Democrats will view the House as the backstop against total Republican control, and why waste money on Biden in Michigan if those resources could save House seats in New York?” Conant said.

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He said more so than the major parties’ fundraising arms, which essentially report to the nominee, a more pronounced shift to the congressional races could be seen from major individual donors and super PACs.

“The billionaire who is spending his own money on politics is going to spend it however he thinks is most efficient,” Conant said. “I think they’ll be the first to pull out of supporting Biden and doubling down on saving or electing house Dems.”

Inflation fell to 3% for the year ending in June in the consumer price index, the Bureau of Labor Statistics reported Thursday, marking three months of disinflation.

The 0.3-point decline, which was driven in part by falling gas prices, is more than predicted by economists, who projected that inflation would fall to 3.1% in June from the 3.3% notched the month before.

On a month-to-month basis, prices fell 0.1%.

Inflation is the biggest concern facing voters, so the White House and Biden campaign are likely to tout Thursday’s better-than-expected report. President Joe Biden is beleaguered by calls to step aside as the Democratic nominee given his age and widely panned debate debut against former President Donald Trump.

The Federal Reserve, which has raised interest rates to their highest level since the turn of the century, will also be pleased to see inflation continuing its descent toward the central bank’s 2% target. Continued declines may allow the Fed to cut rates sooner than expected, which would be good news for consumers and the labor market.

“These data will raise confidence within the Fed that inflation is indeed on a sustainable path towards 2%,” Rubeela Farooqi, the chief U.S. economist for High Frequency Economics, said in a note on Thursday’s report.

“Core inflation,” which doesn’t include volatile food and energy prices, fell 0.1 percentage points to 3.3% for the year ending in June. That is the lowest such rate since April 2021. Overall, core inflation has generally trended down over the past 12 months in some proof that the Fed’s tightening is starting to pay off.

In fact, annual core inflation has fallen every month since March 2023, except for one month earlier this year when it ticked up slightly.

Annual CPI inflation peaked at about 9% in June 2022, and while it is now much lower than it was, there is still quite a way to go until it reaches the Fed’s preferred 2% level. Fed Chairman Jerome Powell even said recently that he doesn’t think the 2% goal will be achieved for some time.

“You know, we don’t see ourselves getting back to 2% inflation this year or next year — well, maybe late next year — but in the year after,” Powell said during an event this month in Portugal. “The main thing is, we’re making real progress.”

Inflation has been blamed on various factors on both the supply and demand sides of the equation. Republicans have argued that the explosion of stimulus spending during the pandemic and ultralow interest rates supercharged price growth. Democrats have been pointing to supply-side problems and have noted that inflation increased in most Western countries and not just the United States.

Biden has become a major target of voters’ ire over the higher prices. Biden’s economic approval ratings are underwater, which bad news for the president, given that he is in a close election-year contest with rival former President Donald Trump, who is the expected Republican nominee.

The problem for Biden is that many of the prices that families face on a daily or weekly basis are still far higher than they were before he became president. Prices for food at home have risen 21% since Biden took office in January 2021, according to the CPI. The price of gas at the pump is still up nearly 50%.

Hand in hand with continued pain from inflation, consumer sentiment has also been pinched. The Conference Board’s consumer confidence index fell to 100.4 in June, down from 101.3 the month before, the group recently announced. 

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Still, despite the higher interest rates, the jobs market has remained relatively stable and even robust by historical standards.

The economy added 206,000 jobs in June, and the unemployment rate rose 0.1 percentage points to 4.1%, the Bureau of Labor Statistics reported last week. That is notably still a low unemployment rate by historical standards.

The economy added 206,000 jobs in June, and the unemployment rate rose a tenth of a percentage point to 4.1%, the Bureau of Labor Statistics reported on Friday.

Investors had expected roughly 190,000 new jobs and for the unemployment rate to hold steady at 4%.

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This story is breaking and will be updated.

Mortgage rates once again crept over 7% as mortgage loan application volume fell, according to the latest report from the Mortgage Bankers Association.

The MBA said that last week mortgage rates rose from 6.93% to 7.03%. Additionally, the Market Composite Index, a measure of mortgage loan application volume, fell 2.6% on a seasonally adjusted basis from the previous week, another sign that the housing market is struggling.

“Mortgage rates moved higher last week, crossing the 7% mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months.”

The latest data is yet another reminder of the struggles that the housing market has been facing.

The higher mortgage rates have eaten into housing affordability and have also depressed home purchases. The higher mortgage rates are a direct result of the Federal Reserve raising interest rates in response to too-high inflation.

New home sales fell 11.3% from April to a seasonally adjusted annual rate of 619,000, according to a recent report from the Census Bureau. The number of new home sales is 16.5% lower than it was in May of last year.

The median sales price for a new home was $417,400 in May.

During the pandemic, a flood of homebuyers was able to lock in ultra-low sub-3% mortgages given that the Fed had loosened its monetary policy to a historic degree.

There has been a unique dynamic at play in the housing market because of the higher mortgage rates. Many people are holding on to their existing homes and waiting to sell until mortgage rates are lower, creating a shortage of existing homes for sale.

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Existing home sales in May slowed 0.7% to a seasonally adjusted annual rate of 4.11 million, the National Association of Realtors reported recently. The pace of existing home sales is down nearly 3% from the year before.

Additionally, the median price for an existing home lurched to $419,300, which marks the highest median price ever recorded and the eleventh month in a row of year-over-year price gains.