Unemployment Claims Rise 14,000, Job Market Remains Strong

Last week, the number of Americans applying for unemployment benefits increased, but overall job cuts remained low. The U.S. Department of Labor reported that the number of unemployment benefit applications rose by 14,000 to 240,000 in the week ending May 24. This figure was higher than the 226,000 new applications predicted by analysts. The weekly unemployment benefit applications are seen as a key indicator of the U.S. job market. Since the spring of 2020, when the COVID-19 pandemic devastated the economy and led to the unemployment of millions, this data has largely remained within the historically healthy range of 200,000 to 250,000.

Earlier on Thursday, a federal court blocked Donald Trump's imposition of large-scale tariffs on imported goods under emergency powers, providing some relief to financial markets. Wednesday's ruling cast a shadow over Trump's signature economic policy, which had shaken global financial markets, angered trading partners, and raised concerns about inflation and economic recession. The Trump administration quickly filed an appeal, and the Supreme Court is almost certain to be asked to rule on the matter. It is unclear whether the White House will suspend all emergency tariffs during the transition period due to this ruling. Trump had previously suspended or reduced many tariff threats, but there are still concerns that a global economic slowdown could disrupt the strong U.S. labor market.

In early May, the Federal Reserve kept its benchmark lending rate at 4.3% for the third consecutive meeting, after lowering it three times at the end of last year. Federal Reserve Chairman Jerome Powell said that the likelihood of both rising unemployment and inflation has increased, making the Fed's dual mandate of controlling prices and maintaining low unemployment more complex. Powell noted that tariffs have weakened consumer and business confidence. The U.S. government reported that the U.S. economy contracted at an annual rate of 0.2% in the first quarter of 2025, slightly higher than the initial estimate. The slowdown in economic growth was due to U.S. companies importing foreign goods in advance of Trump's large-scale tariffs, leading to a surge in imports. Trump is attempting to reshape the global economy through significant increases in import taxes to revitalize U.S. manufacturing. Trump is also trying to significantly reduce the federal government workforce, but many of these cuts are facing challenges from the courts and Congress.

Despite some signs of weakness in the past year, the labor market remains strong, with ample job opportunities and relatively few layoffs. The U.S. government reported that employers added 177,000 jobs in April, exceeding expectations, and the unemployment rate remained at a healthy 4.2%. Companies that have announced layoffs this year include Workday, Dow Chemical, CNN, Starbucks, Southwest Airlines, Microsoft, and its parent company Meta. The Labor Department reported on Thursday that the four-week average of unemployment benefit applications, which smooths out weekly fluctuations, fell by 250 to 230,750. In the week ending May 17, the total number of people receiving unemployment benefits increased by 26,000 to 1920,000.