U.S. jobless claims rose sharply last week, reaching their highest level since early October 2024, in a sign that the labor market may be softening. The Department of Labor reported Thursday that initial unemployment claims for the week ending February 22 totaled 242,000, an increase of 22,000 from the previous week's revised level and well above economists' expectations of 225,000.
The unexpected spike in claims comes amid broader concerns about economic growth and rising uncertainty among consumers. President Donald Trump's ongoing efforts to shrink the federal workforce through Elon Musk's Department of Government Efficiency advisory board have resulted in thousands of job cuts, though it remains unclear how much these reductions have contributed to the latest increase in unemployment filings.
In Washington, D.C., new jobless claims surged 26% to 2,047, marking the highest level for the city since March 2023. By contrast, surrounding areas such as Maryland and Virginia reported slight declines in claims. The increase was also notable in parts of New England, with Massachusetts filings climbing to 9,179-up by 3,731 from the previous week-and Rhode Island claims more than tripling to 2,964.
Despite the rise in initial claims, continuing unemployment claims, which measure those who have remained on benefits for at least a week, declined slightly to 1.86 million. The four-week moving average, which smooths out weekly fluctuations, rose sharply to 224,000, an increase of 8,500.
The labor market had shown resilience in recent months despite corporate layoffs in the tech and finance sectors. However, some economists caution that the latest data could indicate a turning point. "Do not expect a bursting of the pipes in initial claims and unemployment yet," said Joe Brusuelas, principal and chief economist at RSM US. "For now, it's more likely to be a steady drip, drip, drip in the pace of firings."
While weekly jobless claims data are often volatile, the latest report coincides with other economic indicators showing signs of shifting momentum. Orders for durable goods-long-lasting items such as aircraft, appliances, and computers-unexpectedly jumped 3.1% in January after falling 1.8% in December, suggesting that businesses may be accelerating purchases ahead of upcoming tariff increases.
Trump announced Thursday that 25% duties on imports from Mexico and Canada will take effect on March 4, the same day that China will face an additional 10% tariff. The looming tariffs have raised concerns about potential disruptions to supply chains and inflationary pressures on consumer goods.
Meanwhile, the Commerce Department reported that the U.S. economy grew at an annualized rate of 2.3% in the fourth quarter of 2024, unchanged from its initial estimate. Price indexes within the report, which are closely watched by the Federal Reserve, showed slight upward revisions, potentially complicating the central bank's future interest rate decisions.
