The US labor market showed signs of stability despite a moderate increase in jobless claims, with continuing claims rising to 1.869 million. Economists expect the negative effects of federal government layoffs and spending cuts on the economy have not yet materialized.
Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 219,000 for the week ended February 15, above economists’ forecasts. However, the current round of belt-tightening and budget cuts by the Trump administration has not become apparent in the national statistics yet.
Historically low layoffs are keeping the labor market stable, but federal government workers dependent on contracts or funding may face job losses. The White House aims to slash the 2.3 million federal workforce, which could have ripple effects on local economies and trigger private-sector layoffs.
For now, claims consistent with a healthy labor market give policymakers room to keep interest rates unchanged as they monitor inflationary policies, including tax cuts and mass deportations. However, Federal Reserve officials warned about higher inflation from Trump’s initial policy proposals and are closely monitoring labor market indicators.
Data next week on the number of people receiving benefits after an initial week of aid will offer more clues on the state of the labor market in February.
Source: https://www.reuters.com/world/us/us-weekly-jobless-claims-rise-slightly-2025-02-20