Last week saw an uptick in applications for U.S. unemployment benefits, reaching their highest point in three months, yet these figures still align with the robust patterns seen over the past three years.
The Labor Department disclosed on Thursday that the number of individuals filing for jobless benefits escalated by 22,000, bringing the total to 242,000 for the week concluding on February 22. Analysts had anticipated a figure of 220,000.
These weekly benefit applications serve as an indicator of layoffs within the economy.
The four-week moving average, which helps mitigate week-to-week fluctuations, also rose by 8,500, bringing the average to 224,000.
Some experts predict that upcoming reports may reflect layoffs directed by the Department of Government Efficiency in the subsequent weeks or months.
Joseph Brusuelas, the chief economist at RSM, a tax and advisory firm, shared his perspective that a significant surge in layoffs and unemployment isn’t expected as of now.
Brusuelas commented, “At present, it’s more likely to see a gradual increase in the pace of layoffs.”
Recently, U.S. officials initiated government scaling-down measures through a memo expanding President Donald Trump’s initiatives to reduce the workforce. While many probationary employees have been dismissed, focus is now shifting to tenured employees with civil service protection.
Government entities are instructed to present their plans for workforce reductions by March 13, aiming for not only layoffs but also the elimination of some positions.
Despite some labor market weakening signs in the past year, overall conditions remain strong with ample job opportunities and minimal layoffs.
In early February, the Labor Department noted that U.S. companies created 143,000 new jobs in January, a decline from December’s 256,000. Nonetheless, the unemployment rate decreased slightly to an even 4%, indicating a healthy labor market.
Towards the end of January, the Federal Reserve maintained its main interest rate following three cuts during late 2024. Fed authorities are vigilantly observing both inflation and labor market trends for economic weakening signs, foreseeing only two reductions in the rate for this year as opposed to the earlier forecast of four.
A recent consumer prices report suggested an inflation rise last month, stirring uncertainty about potential Fed rate cuts within this year. The consumer price index saw a 3% increase in January compared to the previous year, higher than a 3½-year low of 2.4% in September.
These figures illustrate that inflation has stubbornly exceeded the Fed’s 2% objective over the past six months after a steady decline lasting roughly a year and a half.
While the current rate of layoffs remains historically low, some major companies have already announced workforce reductions in 2025.
Companies like Workday, Dow, CNN, Starbucks, Southwest Airlines, and Facebook’s parent company Meta have implemented job cuts this year.
Previously, layoffs were declared in late 2024 by firms such as GM, Boeing, Cargill, and Stellantis.
Moreover, for the week ending February 15, the total number of Americans receiving unemployment benefits reduced by 5,000, lowering the number to 1.86 million.
