New unemployment filings dropped to 214,000 last week, showing companies continue avoiding major layoffs
The number of Americans applying for unemployment benefits fell last week and remain at historically healthy levels despite some signs that the labor market is weakening. U.S. applications for jobless claims for the week ending December 20 fell by 10,000 to 214,000 from the previous week’s 224,000, the Labor Department reported today.
That’s below the 232,000 new applications forecast of analysts surveyed by the data firm FactSet. The weekly report was released a day early due to the Christmas holiday. Applications for unemployment aid are viewed as a proxy for layoffs and are close to a real time indicator of the health of the job market.
Much has changed in the U.S. economy since President Donald Trump took over from President Joe Biden almost one year ago, but one thing hasn’t changed in that time. Companies just aren’t getting rid of many workers, with new claims running well below normal levels.
How low are the numbers
New claims tend to run around 250,000 to 300,000 a week in a normal economy. The current figures represent significantly lower levels than historical averages, suggesting employers remain hesitant to cut workers despite economic uncertainties.
Not only that, but jobless claims show no sign of rising despite lots of turbulence in the U.S. economy. New unemployment filings are actually lower at the end of this year than they were at the end of 2024, demonstrating remarkable stability in the labor market.
While it’s great news that layoffs are low, the flip side is that most companies are not adding jobs. Economists refer to this trend as a low hire, low fire labor market. Still, as long as most people have jobs and feel secure in them, they are likely to buy enough goods and services from businesses to keep the economy expanding at a healthy pace.
Continuing claims show mixed signals
The number of people already collecting unemployment benefits, known as continuing claims, rose by 38,000 to 1.92 million. Continuing claims have risen in the past few years to a postpandemic high, but they appear to have stabilized in the past few months.
The Labor Department’s report Wednesday also showed that the four week average of claims, which evens out some of the week to week volatility, fell by 750 to 216,750. This smoothed measure provides a clearer picture of underlying trends by reducing the impact of temporary fluctuations.
Recent employment trends
Last week, the government reported that the U.S. gained a decent 64,000 jobs in November but lost 105,000 in October as federal workers departed after cutbacks by the Trump administration. The unemployment rate rose to 4.6% last month, the highest since 2021.
The October job losses were caused by a 162,000 drop in federal workers, many of whom resigned at the end of fiscal year 2025 on September 30 under pressure from billionaire Elon Musk’s purge of U.S. government payrolls. Labor Department revisions also knocked 33,000 jobs off August and September payrolls.
Hiring has clearly lost momentum, hobbled by uncertainty over President Donald Trump’s tariffs and the lingering effects of the high interest rates the Fed engineered in 2022 and 2023 to rein in an outburst of pandemic induced inflation. Since March, job creation has fallen to an average 35,000 a month, compared to 71,000 in the year ended in March.
Federal Reserve response
Earlier this month, the Federal Reserve trimmed its benchmark lending rate by a quarter point, its third straight cut. Fed Chair Jerome Powell said the committee reduced borrowing costs out of concern that the job market is even weaker than it appears.
Powell said that recent job figures could be revised lower by as much as 60,000, which would mean employers have actually been shedding an average of about 25,000 jobs a month since the spring. This potential downward revision adds to concerns about the true health of the labor market.
Companies that have recently announced job cuts include UPS, General Motors, Amazon and Verizon, but those workforce reductions can take months to show up in the government’s data.
Looking ahead
The low fire, low hire labor market appears to be here to stay for a while. There’s no sign businesses are preparing to create lots of new jobs in the immediate future. Yet if the economy speeds up in 2026 as most economists predict, hiring is likely to improve gradually and jobs should be somewhat easier to find.
Jobless claims are consistent with a slow pace of hiring but aren’t sending a signal that hiring conditions have gotten worse, according to economists. The Dow Jones Industrial Average and S&P 500 were set to open slightly lower in Wednesday trading as investors digested the latest employment data.