Critical warning for jobs market as worrying indicator hits highest level in four years
Jobless claims are at their highest level in four years, new data has revealed.
The Labor Department figures are another blow to the struggling labor market.
It comes just days before the Federal Reserve will make a pivotal decision on whether to lower the benchmark interest rate.
Fed chair Jerome Powell recently indicated that his concern about the state of the labor market would be a key factor in the central bank’s decision.
The number of Americans filing for unemployment benefits in the week ending September 6 rose by 27,000 to 263,000, according to figures released Thursday.
It represent the most applicants since the week of October 23, 2021, and the biggest week-to-week increase in almost a year.
Earlier this week, new data revealed that the number of jobs added to the economy for the year through March could actually be 911,000 less than previously reported.
That would mean nearly 76,000 less every month, according to the government’s preliminary benchmark revision.
Jobless claims are at their highest level in four years. Rosie Roque, right, listens to recruiter Cristina Roca, talk about jobs opportunities at the Pembroke Pines Police Dept, at a job fair, Thursday, Aug. 28, 2025, in Sunrise, FL
The revisions followed a gloomy August jobs report that showed the economy added just 22,000 jobs last month, far below Wall Street’s forecast of 75,000.
Economists have been sounding the alarm at signs the jobs market is crumbling – a worrying indication of a possible recession.
Mark Zandi, chief economist at Moody’s Analytics, said a ‘labor recession’ is already underway and that further revisions risk tipping the economy over a cliff.
Zandi added that an uptick in layoffs – already up 140 percent from a year ago – would also darken the situation.
‘If businesses start laying [people] off, then I think this will not just be a jobs recession, it will be an overall economic downturn,’ Zandi told Business Insider.
America’s top banker Jamie Dimon has also warned that the economy is ‘weakening’ following the job data revision.
‘I think the economy is weakening,’ Dimon said of the report.
‘Whether it’s on the way to recession or just weakening, I don’t know,’ he told CNBC.
Fed chair Jerome Powell recently indicated that his concern about the state of the labor market would be a key factor in the central bank’s decision on interest rates this month
The number of Americans filing for unemployment benefits rose by 27,000 last week
There has also been an uptick in layoffs this year
Investors are still pricing in an interest rate cut from the Federal Reserve despite the latest CPI figures showing inflation ticked up in August.
Inflation rose 2.9 percent last month from the same time a year ago, up 0.2 percent from July.
‘Even though a 25 basis point cut next week seems all but certain, the combination of firmer inflation and weaker labor market data complicates the Fed’s picture going forward,’ Jake Krimmel, senior economist for Realtor.com, said.
‘Meanwhile, last year’s job gains were revised down substantially, revealing a labor market on weaker footing than initially thought.’
The Fed’s ‘dual mandate’ is to use interest rates to balance a healthy labor market, while trying to keep inflation at its goal of 2 percent.
The S&P 500 rose 0.8 percent by Thursday afternoon as traders doubled down on their belief a benchmark rate cut is imminent.