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The number of Americans filing new unemployment applications dipped slightly last week as the jobs market stabilized following a massive winter storm. According to figures released by the Department of Labor on Thursday, initial claims fell to 227,000 from a revised level of 232,000 the prior week, slightly above economists' median forecast. Continuing claims climbed to 1.86 million a week earlier. Despite recent high-profile cuts at major firms like Amazon, UPS and Dow, the employment market is proving resilient, with the jobless rate dropping to 4.3% in January.
US Jobless Claims Settle Back but More Workers Remain on Benefits
The U.S. Department of Labor reported that initial jobless claims came in at 227,000 for the latest week, down from last week’s revised level of 232,000 and close to expectations near 222,000. The four week moving average rose to 219,500. Continuing claims increased to 1.862 million, up from 1.841 million the week before.
Weekly claims are based on administrative data from state unemployment insurance programs and provide one of the most timely readings on labor market conditions. Initial claims track new filings for unemployment benefits, while continuing claims measure how many people remain on benefits after their first week.
The decline in initial claims suggests last week’s spike was not the start of a broader layoff wave. But the rise in the four week average and the increase in continuing claims point to a labor market that is stable, not strengthening. Layoffs remain contained, yet the number of people staying on benefits is drifting higher.
That context matters after yesterday’s January jobs report, which showed stronger than expected payroll growth but also revealed major downward revisions to employment across 2025. Average monthly job creation was revised down to a near stall pace, indicating the labor market had already been slowing before the start of this year.
That makes today’s claims data less about relief and more about confirmation. Layoffs are not surging, but hiring momentum is limited, and workers who lose jobs are taking longer to find new ones. The labor market is holding together, but it is doing so at a slower speed than the headline payroll numbers alone would suggest.
For consumers, this kind of environment usually translates into stability without acceleration. Employment remains intact, but job switching slows, wage gains become more measured, and spending tends to shift toward essentials and higher confidence purchases. Households still have income, but the sense of upward mobility softens, and that change in perception often shows up in more selective spending patterns.
That shift affects the broader economy. When fewer workers feel comfortable making large financial commitments, demand for discretionary goods and major purchases tends to cool. Growth does not disappear, but it becomes more uneven and more dependent on necessities rather than confidence driven spending.
Continuing jobless claims fall, underscoring an improving labor market.
Initial claims came in at 227K for the week, which is 4K above the 222K forecast. Last week’s report was revised upward by 1K to 232K.
The 4-week average jumped slightly to 220K, up 7K from last week. In a repeat of 2025 and 2024 before it, January turned out to be an especially light month for initial jobless claims, and we’re seeing a slight pick-up now. However, this is far from abnormal, and the 4-week average remains slightly below the average weekly jobless claims for each of the last three years.
Continuing jobless claims rose to 1.862M, up 21K week-over-week and 12K higher than the forecast of 1.850M. Last week’s report was revised down by 3K to 1.841M. Despite this week’s jump higher, the rolling 4-week average continued to fall. Over the past four weeks, average continuing claims have been 1.847M. This the lowest level for the 4-week continuing claims average since October 2024.
The recent rising initial claims may cause some concern for labor market watchers, but it’s too early for that. Initial claims, even the 4-week average, are volatile and remain at a very comfortable level given the size of the labor market. The falling continuing claims and yesterday’s falling unemployment should inspire confidence regardless of the weekly squiggles.
💡In other news:
Existing home sales come out later today (10a EST). These have been extremely soft for years but picked up in December to 4.35M annualized. Another month of strong(er) sales would be a healthy sign for an economy which leans heavily on the housing sector for growth.
The delayed consumer price index report is out tomorrow and should provide some much-needed perspective on the economy. Now that we know where the labor market stands, inflation will round out the picture. The CPI readings are largely expected to come in softer than December although there is a good chance we’ll see some reacceleration later in the year. Don’t count on a rate cut in March (or April).
Unemployment can be scary—but it can also open doors you may not have had the space to see before. It gives you time to explore new resources, new paths, and new possibilities. If you have the opportunity to go back to school and unemployment can support it, choose something that truly increases your marketability. And if you’re brave enough to pivot, do it. New experiences aren’t scary because they’re wrong—they’re scary because they’re new. Growth lives right there.
Sales of previously owned homes dropped 8.4% in January, the largest monthly decline in four years, the National Association of Realtors said Thursday. While housing affordability improved due to lower mortgage rates and wage gains, supply hasn’t kept pace. Potential buyers are “still struggling,” says Lawrence Yun, NAR’s chief economist. Winter storms and weaker consumer confidence also slowed the market — which had been on a four-month uptick, The Wall Street Journal notes. Sales fell in every region month-over-month, but dropped the most in the West and South.
The Environmental Protection Agency announced an end Thursday to credits to automakers who install automatic start-stop ignition systems in their vehicles, a device intended to reduce emissions that EPA Administrator Lee Zeldin said “everyone hates.”
In remarks with President Donald Trump on Thursday at the White House, Zeldin called start-stop technology the “Obama switch” and said it makes vehicles “die” at every red light and stop sign. He said the credits, which also applied to options like improved air conditioning systems, are now “over, done, finished.”
Zeldin repeated the generally-debunked claims that start-stop systems — which are mostly useful for city driving — are harmful to vehicles, asserting Thursday that “it kills the battery of your car without any significant benefit to the environment.”
This latest Trump administration move to cut automotive industry efforts to clean up their cars and reduce transportation-driven emissions came as Zeldin and Trump also announced a broader repeal of the scientific finding known as endangerment that has been the central basis for regulating U.S. greenhouse gas emissions.
Start-stop is a technology that automatically shuts down a vehicle’s engine when a driver comes to a complete stop, and then automatically restarts the engine when the driver takes their foot off the brake pedal. Developed in response to the 1970s oil crisis, the feature was intended to cut vehicle idling, fuel consumption and emissions.
About two-thirds of vehicles now have it, providing drivers with anywhere from 7% to 26% in fuel economy savings, according to the Society of Automotive Engineers. Start-stop also causes a split-second lag in acceleration, a point of irritation for some consumers and automotive enthusiasts.
Burning gasoline and diesel fuel for transportation is a major contributor to planet-warming gases such as carbon dioxide, methane and more, according to the EPA. By implementing the systems, automakers could earn credits toward meeting federal emissions reduction rules.
“Countless Americans passionately despise the start/stop feature in cars,” Zeldin wrote in a post on X on Tuesday teasing the announcement. “So many have spoken out against this absurd start-stop-start-stop-start-stop concept.”
The announcement made good on Zeldin’s promises last year to “fix” the feature. Start-stop is “where your car dies at every red light so companies get a climate participation trophy,” Zeldin said in a post on X last May. “EPA approved it, and everyone hates it, so we’re fixing it,” he wrote at the time.
Zeldin’s announcement aligns with the administration’s broader attacks on cleaner-vehicle efforts. Trump eliminated the Biden administration’s target for half of all new vehicle sales in the U.S. to be electric by 2030, and signed Congress’ tax and spending bill that ended federal tax credits for new and used electric vehicle purchases.
The administration is also weakening rules for how far new vehicles must travel on average on a gallon of gasoline as it undermines the climate regulation at the core of auto tailpipe emissions.
Jeep-maker Stellantis welcomes the deregulatory effort, a spokesperson’s statement said: “We remain supportive of a rational, achievable approach on fuel economy standards that preserves our customers’ freedom of choice.”
A Ford Motor Co. statement said: “We appreciate the work of President Trump and Administrator Zeldin to address the imbalance between current emissions standards and customer choice.”
General Motors deferred comment to the auto industry group Alliance for Automotive Innovation.
“I’ve said it before: Automotive emissions regulations finalized in the previous administration are extremely challenging for automakers to achieve given the current marketplace demand for EVs,” said John Bozzella, president of the alliance. “The auto industry in America remains focused on preserving vehicle choice for consumers, keeping the industry competitive, and staying on a long-term path of emissions reductions and cleaner vehicles.”