U.S. Jobless Claims Decline as Layoffs Remain Low/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Applications for unemployment benefits fell last week, signaling employers are reluctant to cut jobs despite slower hiring. Job gains have dropped sharply this year, with growth cooling under tariff uncertainty. The Fed is weighing a rate cut as labor market momentum weakens.
U.S. Jobless Claims Quick Looks
- Jobless claims fell by 5,000 to 229,000 last week
- Four-week average rose slightly to 228,500
- Continued claims fell 7,000 to 1.95 million
- Hiring slowed sharply; job gains just 35,000 a month recently
- Layoffs remain historically low despite economic slowdown
- Unemployment rate steady at 4.2%
- Economists describe “no hire, no fire” labor market
- U.S. GDP growth slowed to 1.3% in first half of 2025
- Trump’s tariffs create uncertainty for business expansion
- Fed signals possible interest rate cut in September
Deep Look: Jobless Claims Decline as U.S. Economy Slows and Hiring Weakens
WASHINGTON — August 28, 2025 — Fewer Americans applied for unemployment benefits last week, highlighting an unusual dynamic in the labor market: companies are holding onto workers even as hiring slows.
The Labor Department reported Thursday that jobless claims for the week ending Aug. 23 dropped by 5,000 to 229,000. The number remains within a historically healthy range between 200,000 and 250,000, where claims have mostly held since the U.S. emerged from the pandemic.
At the same time, the broader job market has lost momentum. Over the past three months, employers have added an average of just 35,000 jobs per month — about one-quarter the pace from a year ago.
A “No Hire, No Fire” Economy
Analysts describe the current climate as a “no hire, no fire” economy: companies aren’t aggressively cutting staff, but they’re also reluctant to expand. This has kept the unemployment rate at 4.2%, relatively low by historical standards, but left fewer opportunities for job seekers.
One concerning trend is the number of Americans collecting ongoing unemployment aid. For the week ending Aug. 16, continued claims fell by 7,000 to 1.95 million. But that figure remains close to a four-year high, suggesting many displaced workers are struggling to secure new employment.
Economic Growth Slows Under Trade Policy Uncertainty
The weakening labor market coincides with broader economic sluggishness. Growth in the first half of 2025 slowed to a 1.3% annual rate, down from 2.5% in 2024. Many businesses have scaled back expansion due to uncertainty surrounding President Donald Trump’s tariffs and their impact on trade.
Fed Eyes Interest Rate Cut
The Federal Reserve is closely monitoring these trends. Chair Jerome Powell indicated last week that policymakers may consider cutting rates at their upcoming Sept. 16–17 meeting. The Fed’s benchmark rate currently influences borrowing costs across the economy, from mortgages and auto loans to business lending.
A rate cut could provide relief by lowering borrowing costs, though it also raises questions about whether the Fed will have enough flexibility if the slowdown worsens.
What’s Next
- The labor market remains tight on layoffs but soft on hiring.
- If job growth continues to stall, unemployment could drift upward in the fall.
- Businesses remain cautious, and uncertainty over trade policy lingers.
- Investors are watching closely to see whether the Fed cuts rates in September to stabilize growth.
