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The number of Americans filing for unemployment benefits rose to a three-month high last week, signaling potential concerns about the job market.
According to the Labor Department, jobless claims increased by 22,000 to reach 242,000 for the week ending February 22. Analysts had projected 220,000 new applications, making this rise higher than expected.
According to AP News, Unemployment claims serve as a key indicator of layoffs. The four-week average, which smooths out short-term fluctuations, climbed by 8,500 to 224,000.
While the numbers remain within a historically stable range, analysts suggest they could reflect the impact of recent government layoffs.
On Wednesday, government officials initiated a workforce reduction plan, intensifying efforts to downsize federal employment.
Thousands of probationary employees have already been let go, and agencies have been given until March 13 to submit additional layoff plans.
These cuts, expected to affect career employees, could lead to further increases in jobless claims in the coming months.
Andrew Stettner, an unemployment insurance expert at The Century Foundation, described the new data as concerning. “While still far below recession level, this is the highest number of weekly claims yet this year, and that’s a yellow caution light for the economy,” he noted.
He also pointed out that the figures do not yet account for the thousands of federal job losses recently announced.
🚨 US Labor Market & GDP Growth in Q4 2024
Unemployment claims rose by 22,000 to 242,000, the highest in recent months, while GDP growth held steady at 2.3%, reflecting sustained economic activities despite mixed signals.
February 2025 shows a complex economic landscape, where… pic.twitter.com/aX3p9gnLgN
— Zeroline (@z3roline) February 27, 2025
Unemployment Claims Hit Three-Month High Amid Corporate Layoffs
Despite the rise in unemployment claims, the job market remains relatively stable. In January, US employers added 143,000 jobs, a decline from December’s 256,000 gains.
However, the unemployment rate remained at 4%, indicating that job opportunities are still available, CBS News said.
Some economists, however, see warning signs. Analysts at High Frequency Economics observed that the increase in claims suggests a shift in employment trends.
“Today’s figure is a big departure from the previous downtrend. It brings the level of claims back to where they were at the end of last summer, but going the other way this time,” they stated.
They also warned that potential new tariffs could further impact economic growth.
Continuing unemployment claims, which track the number of people receiving ongoing benefits, also increased in mid-February. Samuel Tombs, chief US economist at Pantheon Macroeconomics, noted that the number of individuals exhausting their 26-week jobless benefits is likely on the rise.
The Federal Reserve is closely monitoring these trends. After cutting interest rates three times in late 2024, the Fed left its benchmark rate unchanged in January 2025.
Officials initially projected four rate cuts for this year but have since revised that expectation down to two. Rising inflation, which hit 3% in January, may further complicate monetary policy decisions.
Major corporations have also contributed to rising unemployment numbers. Companies such as Workday, Dow, CNN, Starbucks, Southwest Airlines, and Meta have all announced layoffs in 2025. In late 2024, job cuts were implemented by GM, Boeing, Cargill, and Stellantis.
Despite the rise in new claims, the total number of Americans receiving unemployment benefits for the week of February 15 fell by 5,000 to 1.86 million.