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By Kristin Myers, Editor-in-Chief

What's Happening Today

Trying to get a sense of how the Fed's rate hikes could impact the job market? Well, one important measure to look at is jobless claims. The number of people filing for unemployment for the first time in the last week of June rose to its highest level since January, according to a report by the Labor Department (DOL) released this morning. Jobless claims rose by 4,000 to 235,000 from the prior week's 231,000, in a sign that the U.S. labor market might begin to be impacted as the Federal Reserve raises interest rates to address surging inflation. However, the number of claims still remained in line with pre-pandemic levels at the end of 2019.

The figures come in advance of the DOL's June jobs report that will be released Friday. Last month's jobs report is highly anticipated because a strong report would soothe concerns about a potential recession, and also strengthen the Federal Reserve's position to hike interest rates even more to fight inflation. However, a weak report could further fuel recession worries.

In a positive sign for the U.S. economy, the trade deficit, or the difference between the cost of imports and the cost of exports, shrank in May, as the United States exported more goods. While a narrowing trade deficit can be good for the economy, the deficit is still over 38% higher than it was last year, as consumer demand for imported goods continues to remain higher than the demand for domestically produced items.

- Kristin

Editors' Picks

Mortgage Rates Fall to 5.30%, Reflecting Recession Fears (The Wall Street Journal)

The US Industrial Complex Is Starting to Buckle From High Power Costs (Bloomberg)

As States and Cities Raise Minimum Wage Rates, Some Experts Say a Higher Federal Rate is Long Overdue (CNBC)

Prepaid Card Provider Eyes Layaway for Credit Builders (The Balance)

Amazon Prime Day 2022: The Best Deals for Small Businesses (The Balance)

What Does Escrow Mean in Real Estate? (The Balance)

How To Invest in Tax-Free Municipal Bonds (The Balance)

Term of the Day

Jobless Claims

If you're trying to assess business conditions or make economic forecasts, one statistic you might monitor is the number of weekly jobless claims. Jobless claims are a measurement of the number of people who have filed for unemployment benefits. They're reported weekly by the U.S. Department of Labor.

There are two types of jobless claims: initial claims, which are filed immediately after a worker loses a job; and continuing claims, which are filed by people already receiving unemployment benefits.

Off the Charts

While there is no surefire way to predict how well an investment will perform, you can examine past returns to get a sense of how much you'll likely earn over time. And in addition to looking at a stock's average monthly and annual returns, it can be helpful to review how often and to what degree its performance deviates from that average, especially when it falls short of the average. This measure is called "downside deviation."

It can be calculated by choosing a "minimal acceptable return," or MAR that you'd like to see that company's stock earn, and then calculating the negative differences between the company's annual returns from the MAR, squaring them, dividing the total by the number of periods, and then taking the square root of the result's absolute value.

For example, if a company's average annual return over 10 years was 4.6%, and there were four periods when the annual performance was lower than an MAR of 5% by 7%, 6%, 2% and 9%, the investment would have a downside deviation of about 4.23%.