Fresh weekly data showed layoffs remain contained even as the broader labor market loses momentum into year-end. The Labor Department reported that initial jobless claims fell by 13,000 to 224,000 for the week ended Dec. 13. That keeps claims in a range consistent with a labor market that’s cooling, not collapsing, even as investors debate whether the U.S. is drifting toward a “low-hire, low-fire” stall.
Under the hood, the picture is less comforting. The four-week average rose to 217,500, and continuing claims climbed to about 1.9 million, suggesting displaced workers may be taking longer to find new roles. This aligns with the soft trend revealed in delayed monthly employment reports earlier this week. Unemployment rose to 4.6% in November, the highest since 2021, with payroll growth just 64,000 after October’s shutdown-distorted decline.
Why it matters now: the Federal Reserve is explicitly watching labor weakness as a reason to ease. Powell flagged the risk of downward revisions to recent job figures, arguing the job market may be weaker than it looks. At the same time, the data stream is unusually messy. Shutdown disruptions have inflated uncertainty around key series, and seasonal volatility in December can exaggerate moves in claims even without a fundamental shift.
Globally, central banks are diverging. Japan’s inflation remains above target. Core inflation held at 3.0% in November, keeping pressure on the Bank of Japan to stay restrictive. In Europe, policy is closer to “wait and see.” The ECB held its deposit rate at 2% and upgraded its growth outlook, signaling fewer cuts ahead.
For readers, the near-term question is whether claims stay near 224,000 and continuing claims plateau, or whether higher unemployment becomes self-reinforcing through weaker hiring. Keep exposure calibrated for uncertainty: the next clean jobs and inflation prints, not this shutdown-tainted batch, will likely set the 2026 policy path.
