Nearly 2 million Americans on unemployment, highest since pandemic era
The number of Americans receiving unemployment benefits for at least a week rose to the highest level since November 2021 in the latest sign of widening cracks in the labor market.
Workers who have received benefits through a “continued claim” for unemployment insurance jumped to 1.97 million in late July, up from 1.85 million in early January, according to Labor Department data released Thursday. New filings for unemployment claims remain low, rising by just 7,000 last week.
The figures reinforce the increasingly weaker labor market landscape. Even without a large pickup in layoffs, many Americans cannot find new work and are facing longer bouts of unemployment. A separate jobs report released last week showed that employers are hiring at close to the slowest pace in more than a decade, excluding the pandemic.
“We shouldn’t ignore the impact of slower hiring,” said Daniel Zhao, chief economist at Glassdoor. “It means that it’s hard for unemployed people to get back into the workforce, but it also means that those unemployed workers might have to settle for a worse job, or people who are currently employed aren’t able to climb the career ladder.”
The labor market has slowed due to the Trump administration’s higher tariffs, federal spending cuts and aggressive immigration restrictions, labor experts say. Long-awaited tariffs on dozens of countries took effect early Thursday, imposing sharper taxes on imports from dozens of countries that could get passed on to U.S. consumers and businesses, further slowing hiring, experts say.
“In 2025, employers are facing a tremendous amount of uncertainty,” Zhao said. “The level of uncertainty we’re seeing is making it hard for businesses to commit to plans that include hiring.”
Federal layoffs have also accelerated and will continue to rise this year, which could spill over to other industries. A U.S. Supreme Court decision in July allowed the Trump administration to proceed with job cuts.
Thursday’s report adds to growing evidence that the labor market is softening. A jobs report released Friday showed a much slower labor market than previously recorded, with lower-than-expected job gains in July and far fewer job gains in May and June, 258,000 less than previously reported for those months. The unemployment rate in July also edged up slightly to 4.2% but is at a relatively low level.
The somber report rankled President Donald Trump, who took the unprecedented step of firing the top official at the Bureau of Labor Statistics, Erika McEntarfer, hours after the data was released. Trump claimed, without evidence, that jobs data had been manipulated for political purposes.
Volatile trade policy is beginning to weigh on parts of the labor market that are sensitive to higher tariffs. Many retail, construction and manufacturing employers have paused plans for hiring and expansion amid the expectation of the higher import costs.
Meanwhile, hiring in white-collar sectors, which include office jobs, has been stagnant for many months.
Economists say that employers may be holding on to workers rather than laying them off because of the recent experience of fierce competition for scare workers and labor shortages after the pandemic. But if economic conditions continue to deteriorate, employers will begin conducting mass layoffs.