Recurring Jobless Claims Shrink for 3rd Straight Week: Department of Labor

The number of Americans receiving unemployment benefits fell for the third straight week, according to new data released by the Department of Labor on Jan. 29.

For the week ended Jan. 17, continuing jobless claims declined to 1.827 million, from the previous week’s upwardly revised 1.865 million, the lowest level since September 2024.

The consensus estimate signaled a reading of 1.86 million.

Economists pay close attention to this number to gauge the difficulties unemployed workers may face in finding jobs.

Recurring claims have remained elevated, hovering above 1.9 million throughout the second half of last year. In addition, the long-term unemployment rate—out of work for 27 weeks or longer as a percent of the total unemployed—ticked up to a near-four-year high of 26 percent in December, according to the Bureau of Labor Statistics (BLS).

Economic observers have attributed this trend to the low-fire, low-hire climate, in which individuals struggle to find new jobs.

Others note that the improving numbers could reflect recipients exhausting their unemployment benefits, as eligibility is typically limited to 26 weeks in many states.

Still, job availability could be returning to the U.S. labor market.

Job postings on Indeed have been steadily rising since early November, signaling a slow and steady labor demand rebound.

Federal Reserve Chair Jerome Powell, speaking to reporters on Jan. 28, hinted that he does not believe employment conditions will experience further deterioration. The central bank chief said that the upside risks to inflation and the downside threats to the labor market have diminished.

At the first meeting this year of the policy-making Federal Open Market Committee, officials left federal funds interest rates on hold at 3.5–3.75 percent, and investors do not expect a quarter-point rate cut until June.

“It makes sense that the Fed would leave rates unchanged if they were less worried about the labor market—especially with inflation stubbornly persistent above their target—but if anything were to change with hiring trends, then they will need to pivot quickly to cutting again,” Chris Zaccarelli, CIO for Northlight Asset Management, said in a note emailed to The Epoch Times.

Market watchers will obtain a clearer view of the U.S. labor market as the BLS releases its final benchmark revisions for non-farm payrolls through March 2025. Powell and others suggest it could indicate negative job growth.

The data will be attached to the January jobs report on Feb. 6.

Layoffs Stay Low

The number of Americans filing new applications for unemployment benefits remained around historically low levels.

Initial jobless claims dipped to 209,000 for the week ended Jan. 24, higher than the market forecast of 205,000. The previous week’s reading was adjusted higher to 210,000.

The four-week average, which strips out week-to-week volatility, edged up to 206,250 from an upwardly revised 204,000.

In addition, initial unemployment claims from federal employees, which have been under the microscope as of late to determine the impact of the record-breaking U.S. government shutdown last year, declined by 212, to 798.

Overall, despite the post-Thanksgiving volatility in the data, layoffs have not accelerated.

“We see a resilient U.S. economy, supported by steady demand and fiscal support, as well as the AI boom’s investment cycle and wealth effect. The labor market is easing gradually, and layoffs remain contained,” Ali Hassan, portfolio manager at Thornburg Investment Management, said in an emailed note to The Epoch Times.

Growth in the fourth quarter is expected to increase by more than 5 percent, according to the widely watched Federal Reserve Bank of Atlanta’s GDPNow Model. During the 43-day spending impasse, the expectation was that the shutdown could shave off the GDP.

The first quarter of 2026, meanwhile, is also shaping up to be decent. The New York Fed’s Staff Nowcast indicates GDP growth of nearly 3 percent.

The current debate is whether the economy can continue growing without stellar job growth.

Some experts believe it is possible, citing the enormous productivity gains in the past two quarters.

The BLS published the final third-quarter estimate for nonfarm labor productivity, reporting a 4.9 percent increase from the previous quarter’s 4.1 percent.

While layoffs have been low, companies have still announced job cuts this month. Amazon, Dow, Mastercard, Meta, and UPS have unveiled plans to slash jobs in the year ahead.