U.S. Jobless Claims Surge, GDP Growth Slows, and Durable Goods Orders Rebound

Unemployment Claims Jump to 242,000

The U.S. Department of Labor reported a significant increase in initial unemployment claims, rising to 242,000 for the week ending February 22, up by 22,000 from the previous week’s revised figure of 220,000. The four-week moving average climbed to 224,000, suggesting potential softness in the labor market. Insured unemployment remained stable at 1.2%, with 1,862,000 continuing claims, showing only a mild decrease of 5,000. The labor market’s resilience may be tested if jobless claims continue to rise, adding uncertainty to economic stability.

GDP Growth Slows to 2.3% in Q4 2024

The U.S. Bureau of Economic Analysis released its second estimate for Q4 2024 GDP, showing an annual growth rate of 2.3%, down from 3.1% in the third quarter. The deceleration was driven by downturns in investment and exports, partially offset by robust consumer and government spending. The price index for gross domestic purchases rose 2.3%, with the personal consumption expenditures (PCE) price index up 2.4%. Excluding food and energy, core PCE inflation increased 2.7%. These figures reflect persistent inflationary pressures, which may influence Federal Reserve policy decisions.

Durable Goods Orders Rebound in January

New orders for manufactured durable goods rose by 3.1% to $286.0 billion in January, following two consecutive monthly declines. The $8.7 billion increase was primarily led by transportation equipment, which surged 9.8% to $96.5 billion. Excluding transportation, new orders were flat, while excluding defense, they rose 3.5%. This rebound in durable goods orders indicates a potential stabilization in manufacturing activity, which could support economic growth if sustained.

State-Level Jobless Claims Highlight Regional Variability

Kentucky and Tennessee recorded the largest increases in jobless claims, up by 3,012 and 2,766 respectively, driven by layoffs in the manufacturing sector. California saw the most significant drop, with 5,530 fewer claims, while Pennsylvania’s decrease of 1,110 was attributed to reduced layoffs in healthcare, administrative support, and food services sectors. These regional trends highlight the uneven impact of labor market pressures across the U.S.

Market Outlook: Mixed Signals with Bearish Bias

The combination of rising jobless claims, slowing GDP growth, and mixed durable goods data presents a complex market environment. While the rebound in durable goods orders offers some optimism, the slowdown in economic growth and increased unemployment claims could weigh on market sentiment. Traders should monitor upcoming economic data closely, as continued labor market weakness may prompt more cautious positioning in equity and fixed-income markets.