Claims for unemployment insurance in America just jumped to their highest point in 8 months. This spike indicates a labor market cool down, a departure from the robust hiring we’ve seen in past years. For the week ending May 31, there were 8,000 more new applications for unemployment benefits compared to last week, bringing the total to 247,000. It’s undeniable that today’s economy is undergoing a dramatic transition, exacerbated by a series of tariff announcements in 2018 by then-President Donald Trump. As a result, a majority of firms are lowering sales and profit expectations.
Just as recently as December 2022, there were two job openings for every unemployed American. However, the landscape has changed significantly. The Labor Department’s latest report highlights a troubling trend: there is now only one job available for each unemployed individual. Combined with the overall shrinking of the labor market, this change is notable. We are on the other side of the hiring boom of 2021 to 2023.
The net number of Americans on the unemployment rolls fell by 3,000 to 1.9 million for the week ending May 24. Fears over the permanence of these changes still hang in the air. The four-week moving average of jobless claims rose 4,500 to 235,000, the highest since late October. Ever since the COVID-19 pandemic upended the economy five years ago, weekly applications for jobless benefits have bounced around. They’ve stayed well below the historically normal level of 200,000 to 250,000.
Indeed, jobless claims have skyrocketed in the last month as some of the largest names in tech and finance unveil mass layoffs. Big players such as Workday, Dow, CNN, Starbucks, Southwest Airlines, Microsoft, and Meta have all followed suit. Likewise, Procter & Gamble recently made headlines with their announcement of laying off 7,000 employees. This layoff, representing nearly 15% of its non-manufacturing workforce, is the third phase of a two-year restructuring plan.
Economic indicators reflect a challenging environment. The U.S. economy shrank at an annualized rate of 0.2% for the first quarter of 2025. Additionally, Trump’s tariffs have dampened consumer and business sentiment, causing many firms to lower their sales and profit expectations for the coming years or refrain from issuing guidance altogether.
U.S. job openings unexpectedly surged in April to the highest level since July. This increase indicates that even with more layoffs, there continues to be a strong need for workers in some industries. The Americans quitting their jobs—a classic sign of good job-market prospects—has tanked. This indicates that even when it makes sense for workers to switch jobs, they are afraid to do so in such a volatile situation.
So far, the Federal Reserve has held its benchmark lending rate level at 4.3% at three consecutive meetings. That comes on the heels of three cuts to their rate made at the end of last year. This decision marks the continuation of a pro-growth, anti-inflationary policy.
