Some relatively good news about the job market: The Labor Department reported initial claims for unemployment benefits fell by 10,000 nationwide last week. That’s now down to the historically-low level we saw before the pandemic.
It’s a very different story than what we saw in the latest Bureau of Labor Statistics jobs report, which showed that, since September, the economy lost about 40,000 jobs while unemployment ticked up to 4.6%.
Other than the pandemic, that’s the worst unemployment rate we’ve seen since 2017.
So one report says fewer people are filing for unemployment while the other says there are more people unemployed. How does that work?
Starting with the ‘positive’ employment news, “It’s good to see that jobless claims are low,” said Ryan Young, chief economist at the Competitive Enterprise Institute. “They came in about 10,000 people under estimates, which is 10,000 paychecks that are safe.”
But that might not tell the whole story.
Michele Evermore at the National Academy of Social Insurance is an expert on the unemployment system. “Initial claims, as I always say, only measure people who lose work and then apply for unemployment insurance,” she said.
And right now, Evermore said, the workers losing jobs are least likely to apply for unemployment insurance.
“So that’s Black workers, people who are part-time for economic reasons, people who are marginally attached to the workforce — they may have exhausted their unemployment insurance,” she said.
Right now, the unemployment rate is not high by historic standards.
But as it gradually rises, it becomes a bigger problem for the economy, and for particular worker groups, said Dean Baker at the Center for Economic and Policy Research. Right now, it’s at 4.6%.
“Go back a couple years, we were at 3.4%. The unemployment rate for whites has not risen a lot, 3.9% now. For Blacks, we’re up at 8.6%. That’s high unemployment — I mean, if that was the overall unemployment rate, we’d say we were in a bad recession,” he said.
And there’s not a lot of encouraging news heading into 2026, said Mike Fratantoni at the Mortgage Bankers Association, because job creation has basically stalled out.
“There really was no net employment growth from April through November. Businesses are just cautious about hiring; the hiring rate is really as low as it’s been over much of the last couple of decades. And you see employees very cautious as well,” he said.
All this has knock-on effects for the rest of the economy, from consumer spending to housing.
“If people don’t feel confident in their employment situation, it’s unlikely they’re going to move forward to buy a home,” Fratantoni said.
And surveys find Americans are evermore apprehensive that they’re going to lose their jobs or see their pay cut in the coming year.
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