Jobless Claims Fall, But Long-Term Unemployment Ticks Up

Fed. chair Jerome Powell.

Initial jobless claims for the week ending June 21 dropped by almost 10,000 to 236,000, marking the lowest level in 5 weeks and also falling within the historically modest range of 205,000 - 250,000. This dip suggests that layoffs have remained limited, even as businesses continue to navigate some of the uncertainties of the current trade tensions. 

Seasonal factors, such as post-school-year workforce shifts, are also at play, complicating the weekly picture. Meanwhile, the Fed has decided to keep interest rates steady between 4.25% and 4.5% maintaining a “wait and see” posture as it evaluates how tariffs and inflation will impact broader economic stability.

However, continuing claims, which track people still receiving benefits after their first week, jumped by 37,000 to hit 1.97 million for the week ending June 14, the highest level seen since November 2021. So while layoffs haven’t spiked, it’s clear that those who do lose their jobs are staying unemployed longer than before. It’s not exactly a red flag, but it’s not a great sign either. Economists are starting to describe this as a slow drip, a soft cooling where hiring is losing steam, even though businesses aren't laying off people at a high rate. And yes, the job market isn’t crashing, but it’s not running hot like it used to.

Unemployment might edge up to around 4.3% in June, which isn’t disastrous, but still enough to raise eyebrows. The Fed, for now, seems content to stay on pause. Rate cuts aren't off the table, but they’re not coming tomorrow either. Officials are waiting for a clearer signal from job data, inflation, or elsewhere before they make a move.