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By Kristin Myers, Editor-in-Chief

What's Happening Today

The strength of the labor market had been helping sustain hopes that we might be able to avoid a recession. But today the Department of Labor reported that the number of people filing for unemployment for the first time rose by 7,000 to 251,000 last week, up from the prior week's 244,000. Not only were the numbers higher than expected (in fact, economists thought the number would drop), but they were also a new eight-month high.

If you're feeling nervous about a potential recession or an economic downturn, this news might be alarming. After all, if more workers are being laid off and seeking unemployment benefits, it could be a sign that companies aren't performing as well as they had been or don't expect they will need as many workers in the future. For months, the performance of the job market has strengthened the Federal Reserve's stance that the U.S. economy was strong enough to handle aggressive interest rate hikes while avoiding a recession and achieving a "soft landing." Signs of weakness in the labor market undercut that argument.

But don't expect this weakening in the labor market to cause the Fed to think twice about its policy decision next week on interest rates, which most observers expect to result in an increase of three-quarters of a percentage point, just like in June. This one piece of data is unlikely to deter the central bank in its fight against inflation.

- Kristin

Editors' Picks

U.S. Leading Economic Index Pointing to Recession Around End of the Year, Conference Board Says (MarketWatch)

Heat Wave Sends Natural-Gas Prices Soaring (The Wall Street Journal)

Record-High Rent Is Still More Affordable Than Buying a Starter Home (Bloomberg)

How To Decide What To Do With Your 401(k) After You Change Jobs (The Balance)

How Does Unemployment Insurance Work? (The Balance)

Retirees Could See Their Monthly Social Security Checks Jump by $175 Next Year. Is That Enough to Keep up With Inflation? (CNBC)

Which States Are the Most Tax-Friendly for Retirees? (The Balance)

Term of the Day

Rollover IRA

If your employer offers a company retirement plan such as a 401(k), and you wind up leaving the company, you have a few options for what to do with your retirement funds. One of them is to open a rollover IRA with a brokerage firm and have the funds from your old 401(k) moved into the account.

A key benefit of a rollover IRA is it lets you keep enjoying the tax shelter of a qualified retirement account. And if you roll over your funds within 60 days, you won't be taxed as having taken a withdrawal from your old 401(k).

Also, you can exceed the typical IRA contribution limits for this one event, because you'd be moving over the total amount of your 401(k) into another tax-advantaged retirement account. That amount may be much more than the annual $6,000 limit for most workers.

Off the Charts

As the Fed's campaign to fight inflation intensifies with the biggest interest rate hikes since 1994, skeptics who include lawmakers and economists are questioning whether getting price increases under control this way is worth the potential cost to jobs. The last time we saw inflation like this in the U.S. in the early 1980s, the Fed hiked rates so much that it caused a recession and massive job losses.