The number of Americans applying for unemployment benefits dropped last week, offsetting the sharp increase seen the week before, though signs of a cooling labor market remain evident.
According to data released by the Labor Department on Thursday, layoffs continue to stay relatively low. However, hiring momentum has weakened considerably as both demand for and supply of workers decline. Economists attribute this slowdown to uncertainty caused by tariffs on imports and a tighter immigration policy that has reduced available labor. Federal Reserve Chair Jerome Powell described the current situation as a “curious balance,” with fewer layoffs but also slower job growth.
Despite the challenges, many analysts viewed the latest dip in jobless claims as a positive sign of the economy’s underlying strength. Some even argued that concerns raised by the Federal Reserve about a weakening labor market may be overstated. “The steady trend in claims is still far too low to suggest a recession,” said Carl Weinberg, chief economist at High Frequency Economics. “It also weakens the case for further or larger interest rate cuts.
For the week ending September 13, initial claims for state unemployment benefits fell by 33,000 to a seasonally adjusted 231,000. This reversed the previous week’s spike to 264,000, the highest level since October 2021. Much of the earlier surge was traced to Texas, where the state’s Workforce Commission confirmed an increase in fraudulent unemployment insurance claims following the Labor Day holiday.
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