American Job Seekers Face Prolonged Unemployment
Labor Department data released on Thursday indicates a rise in extended unemployment insurance claims, highlighting the challenges faced by American workers in securing new jobs. During the week ending January 25th, 1.89 million continuing weekly claims were filed, an increase from the previous week's 1.86 million and approaching the highest level in the past three years. This suggests a growing number of Americans are experiencing extended joblessness.
While new weekly claims remain near their lowest level of the past year, suggesting a low layoff environment, economists emphasize the elevated level of continuing claims as evidence of increasing difficulties for workers seeking employment. Oxford Economics' Chief US Economist, Ryan Sweet, notes that job seekers' perceptions of the labor market vary significantly based on their employment status. Sweet states, "Conditions are challenging for those who are unemployed or not in the labor force but want a job."
ADP's Chief Economist, Nela Richardson, echoes this sentiment, citing the company's data in a recent call with reporters. "It's taking longer to find a job," Richardson said. "Our ADP research indicates that even college degree holders are experiencing greater difficulty."
The Federal Reserve has acknowledged the growing challenges in the labor market. Fed Chair Jerome Powell remarked in a press conference, "It's a low hiring environment... If you already have a job, it's good news. But if you're trying to find one, the job finding and hiring rates have declined."
Data from the Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday confirmed Powell's assessment. The hiring rate remained unchanged at 3.4% in December, near its lowest levels of the past decade. The job openings rate has also declined in recent months, reaching 4.5% in December, near its lowest point since the labor market's pandemic recovery.
While Powell described the labor market as "broadly stable" during his recent press conference, hiring activity has slowed, and economists warn that concerns over tariffs and Trump-era policies may further impact job prospects. The key question for investors is whether the labor market can maintain its current stability.
The release of the January jobs report on Friday morning will provide a fresh perspective on the situation. The report is projected to show a monthly gain of 170,000 jobs, a decline from the 256,000 added in December. The unemployment rate is expected to remain steady at 4.1%. Revisions to labor data from the past year will also be included in the report.
Wells Fargo's economics team led by Jay Bryson predicts, "The January jobs report will likely indicate continued softening in the labor market over the past year, but not to an alarming extent."