More Americans sought unemployment benefits last week, but layoffs remain low despite economic uncertainty caused by the Iran war. The Labor Department reported Thursday that jobless claims rose to 215,000, up from 210,000 the previous week. The four-week moving average of claims, which smooths out week-to-week volatility, increased by nearly 6,300 to 209,000.
Stable Claims Amid Economic Uncertainty
The number of Americans signing up for unemployment benefits, a proxy for layoffs, has stabilized in a low range of mostly 200,000 to 250,000 per week since the U.S. economy emerged from a brief but severe pandemic recession in 2020. This persistently low level of claims suggests that most U.S. companies have not resorted to layoffs. However, employers have not been adding many jobs either.
Weak Hiring Trends
Last year, companies, nonprofits, and government agencies added fewer than 10,000 jobs per month, marking the weakest hiring outside recession years since 2002. Job creation has picked up slightly so far this year, averaging 76,000 per month from January through April. In contrast, employers added 122,000 jobs per month in 2024 and nearly 400,000 per month from 2021 through 2023 as the economy rebounded from COVID-19 lockdowns.
Factors Keeping Unemployment Low
The United States now needs fewer jobs to prevent the unemployment rate from rising. President Donald Trump's immigration crackdown and ongoing Baby Boomer retirements have lowered the monthly "break-even rate" of hiring to potentially zero. The unemployment rate, which stood at 4.3% in April, remains low by historical standards.
Impact of the Iran War
The Iran war has clouded the economic outlook as higher energy prices squeeze consumers and businesses. Iran responded to U.S. and Israeli attacks by engaging in economic warfare, closing the Strait of Hormuz, through which a fifth of the world's oil passes. This has caused the biggest disruption of global oil supplies in history. Consequently, U.S. gasoline prices have surged to an average of $4.43 per gallon, up from $2.98 per gallon on the eve of the conflict, according to AAA.
