Analysts are fearful as they watch filings for unemployment benefits climb to a dangerous “threshold” above 240,000 applications this cycle.
“New filings for unemployment benefits continued to climb last week, reaching 248,000 and for the second week in a row nearing our threshold of 250,000 that suggests risk of a recession,” writes Tuan Nguyen, an economist analyzing U.S. and global economic data at RSM US LLP.
Nguyen said the mass layoffs of federal workers, together with a less accommodating labor market, are pushing “continuing claims” (workers who are still looking for work weeks after becoming unemployed) to 1.956 million last week. This, he said, is the highest level it’s reached since November 2021.
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“If continuing claims continue to rise, it will be time to worry more about the labor market,” Nguyen said.
Bloomberg reports the rise in applications for unemployment benefits adds to “evidence that it is taking unemployed Americans longer to find a new job.” It added that Thursday’s U.S. Labor Department data on “continuing claims” in the last week of May 31 surpassed “all estimates in a recent Bloomberg survey.”
Nguyen said seasonally adjusted jobless claims “overall have peaked around June and July the previous two years, but the labor market is “much softer this year than in the previous two years, while hiring has slowed down materially because of trade uncertainty.”
CNBC reports the stock market may have rebounded thanks largely to President Donald Trump pausing his unilateral tariffs on U.S. trading partners, but small retailers are still suffering. Matt Kubancik, a small business owner and Trump voter in Louisville, Kentucky, describes the first months of Trump’s return to office as a “vacation from hell.”
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Small retailers like Kubancik, who rely on Chinese imports, were rocked by Trump’s wildly swinging tariffs announcements. Even now, tariff rates with China are at historically high at 30%, which means Kubancik pays more for his Chinese imports when they hit U.S. ports.
“I’ve been a registered lifelong Republican. I’ve supported independent candidates and Democratic candidates in the state of Kentucky before, but this made it enough to switch parties,” Kubancik told CNBC.
While the U.S. economy did add 139,000 new jobs, numbers suggest there were only 37,000 in the private sector–the fewest since March 2023. For recent college grads and others at the entry level of the workforce, the market hasn’t been this challenging in years. Additionally, labor market data and surveys from the services and manufacturing industries suggest signs of “paralysis“.
“Nobody is wanting to ramp up hiring when they don’t know what’s going to happen down the line,” RBC Capital Markets economist Carrie Freestone told Yahoo Finance.
Read the Bloomberg report here and Nguyen’s ‘Real Economy’ blog at this link.
