Are job cuts a canary in the coal mine?

Making sense of the economy right now is as challenging as ever. Individuals, households, business leaders and policymakers are gauging crosswinds including the direction of prices and the momentum of the job market.

Here's a look at some of the latest data:

Jobless claims and job cut announcements: The latest read on new jobless claims shows a week-over-week decline. And it erases much of the previous week’s spike in new claims, which are a proxy for layoffs.

Seasonally adjusted new applications for unemployment benefits dropped 16,000 to 225,000.

Continuing claims, representing the total number of people receiving unemployment assistance, rose by 57,000 to 1.6 million.

Both new and continuing claims remain below year-ago levels, despite the acceleration in job cut announcements we’ve seen in recent months, with the technology sector leading the way with layoffs and plans to cut jobs.

The private data from outplacement firm Challenger, Gray & Christmas finds U.S. employers announced 76,835 job cuts in November. That’s a whopping 127% jump from October. It’s also up more than 400% from the same month last year.

The formerly red hot technology sector is on the leading edge of these cuts. From Challenger, the sector announced 52,771 cuts in November, adding up to a total of nearly 81,000 this year. And year-to-date, it is the most since 2002.

Whether looking at the sharp slowdown in the housing market, the bear market in stocks, the crash in crypto or the realignment in technology, all have suffered under the weight of the Federal Reserve's move away from an easy money approach following years of low or near-zero interest rates.

Back to the job market: The news on jobless claims comes after release of updated “JOLTS” figures from the Labor Department put the nation’s total job openings at 10.3 million at the end of October, declining by 353k or 3% from the previous month. Other metrics including hires, separations, layoffs and discharges suggest the employment picture is essentially steady.

What does the Fed think? The Federal Reserve has viewed the mismatch between supply and demand for labor as an inflation risk factor. Chairman Jerome Powell is now saying that the central bank may want to begin moderating – as he put it the pace of rate increases.

The Fed’s next announcement on rates is a couple of weeks away. It’s seen raising the benchmark rate by ½ of 1% after four consecutive boosts of ¾’s of 1%. At the same time, he and his colleagues suggest they’re not yet finished boosting rates, which may remain higher for longer in the battle against inflation.

In the latest employment report from ADP, hiring in the private sector rose by only 127,000 in November. It had the goods producing sector shedding 86,000 jobs, while services added 213,000 in November. At the same time, ADP says small and large businesses lost jobs last month, while mid-sized employers added workers. We’ll see how that aligns, or not with the more closely watched Labor Department report.

Economists broadly believe that we will see a rise in unemployment in the coming months, reflecting a further slowdown in hiring and the acceleration in job loss.

Income and spending: The latest figures on incomes and spending from the government again go on the side of the ledger indicating that a recession has not yet begun, which is not a guarantee regarding future months. So-called real spending, or spending adjusted for inflation was up a strong 0.5%. The headline numbers tell a similar story with income up 0.7% and spending up 0.8%, the most since June. Of course, spending can’t run ahead of income forever. The savings rate fell to a new 17-year low of 2.3%, suggesting consumers could be running on fumes, from a personal finances standpoint, as we get into the new year.

As for the other side of the story also part of this report, the Federal Reserve’s favored measure of inflation, core personal consumption expenditures (PCE) is up 5% over the past year, well above its 2% inflation target. Hence, rates are going higher.

Mark Hamrick is senior economic analyst and Washington Bureau Chief for Bankrate.com. 

Follow on Twitter: @Hamrickisms