Plant raid could slow South Korean investment; Inflation edges higher; Jobless claims rise

South Korean President Lee Jae Myung warned that companies from his country will be “very hesitant” to invest in the United States after last week’s major immigration raid at a Hyundai auto manufacturing plant in Ellabell, Georgia.

More than 300 South Koreans arrested in the federal raid have since been released and were due to return home Friday. The South Korean leader called the situation “extremely bewildering” during a news conference this week, noting it has long been common practice for Korean firms to send workers to overseas factories, especially when facilities are being set up.

If that is no longer allowed, establishing U.S. facilities will become more difficult, “making companies question whether it’s worth doing at all,” Lee said. The matter arose as U.S. and Korean leaders are negotiating visa policies for South Korean workers, and as overseas firms in numerous industries seek to expand U.S. production to minimize effects of import tariffs.

White House officials have defended the Georgia plant raid, contending it will not deter foreign investment. President Donald Trump said last weekend his administration plans to make it “quickly and legally possible” for foreign firms to bring workers into the United States “if they respected its immigration laws.” 

August’s U.S. consumer prices increased 0.4% from the prior month and 2.9% from a year earlier, as the annual inflation rate rose from July’s 2.7% and reached its highest level since January. The Labor Department Thursday said shelter costs including rents continued to be a major driver of inflation, with prices in that category rising 3.6% on an annual basis.

Ryan Sweet, chief U.S. economist at forecasting firm Oxford Economics, said inflation “rose a little more than we anticipated” and there were sizable gains in categories such as airfares. Prices for some goods are rising as trade tariffs are passed on to consumers, though Oxford like other firms is standing by a prior forecast of a Federal Reserve interest rate cut at its next meeting Sept. 16 to 17.

“Inflation is on the Fed’s radar, but a consensus is forming within the central bank that tariffs will cause a one-time price level increase even if it’s spread out over several months, because of the lag effects between changes in the effective tariff rate and consumer prices,” Sweet said in a statement Thursday. 

There were 263,000 initial U.S. claims for unemployment insurance for the week ended Sept. 6, up 27,000 from the previous week and hitting a high level relative to weekly levels of the past year, according to Thursday data from the Labor Department.

“Initial jobless claims jumped to their highest level in nearly four years last week,” Oxford Economics Lead U.S. Economist Nancy Vanden Houten said in a statement. “Initial claims have trended higher over the last several weeks, hinting at a pickup in layoffs.”

Vanden Houten noted much of the past week’s rise in initial claims was driven by a sharp increase in Texas. She said the nation’s continued claims have stabilized in recent weeks but remain elevated and consistent with a slow pace of job creation.