Jobs Market Holds Steady as Economy Grew Slightly Less Than Forecasted Earlier in the Fourth Quarter

Latest reports show an economy grappling with higher interest rates but still growing at a decent pace.

The economy grew in the fourth quarter at a pace slightly below earlier estimates, but at a still healthy 2.7% annual rate while the job market held up last week, according to two reports released Thursday.

The second estimate of gross domestic product for the fourth quarter was a decline from the prior 2.9%, mainly because of a reduction in spending but, in contrast, personal income came in better as a result of higher wages and tax cuts in some states.

Meanwhile, the number of Americans filing first-time claims for unemployment benefits fell to 192,000 from a revised 195,000, while the four-week moving average was 191,250 – up 1,500 from the prior period.

Neither report changes the story that the economy is undergoing a transition from the post-COVID recovery with the labor market still very healthy by historical standards and consumers still spending at a slower pace in the face of higher interest rates.

The jobless numbers stand in contrast to the episodic notices of layoffs in the tech industry and among companies that may have added a lot of workers during the coronavirus pandemic. However, people laid off by those firms may have received severance payments and have yet to file for unemployment, assuming they do not find other jobs.