Who Pays for the “Stable” Labor Market
U.S. jobless claim applications rose last week, but stayed at historically low levels as the labor market headed into Friday’s April jobs report with economists expecting a sharp slowdown from March’s hiring pace. The Labor Department said Thursday that the number of Americans filing for unemployment benefits in the week ending May 2 rose by 10,000 to 200,000. That was still below the 205,000 new applications analysts surveyed by FactSet had expected, and it came after the previous week’s claims figure was revised up by 1,000 to 190,000, the fewest since 1969.
The numbers are being sold as stability, but the people at the bottom are the ones living inside the “low-hire, low-fire” trap. Weekly filings for unemployment benefits are treated as a proxy for layoffs and a near real-time indicator of the job market, yet the same data also show that those without work are left struggling to find a new job while employers keep their grip on hiring.
The four-week moving average of jobless claims fell to 203,250, down 4,500 from the previous week. The total number of Americans filing for unemployment benefits for the previous week ending April 25 declined by 10,000 to 1.77 million.
What the Top-Line Numbers Hide
The Labor Department reported last month that U.S. employers added an unexpectedly strong 178,000 new jobs in March, nudging the unemployment rate back down to 4.3%. That followed a surprisingly large loss of 92,000 jobs in February. Revisions also trimmed 69,000 jobs from December and January payrolls, another reminder that the labor market remains under strain even when the headlines are dressed up as resilience.
The government issues its monthly jobs report for April on Friday. CNN said the report was expected to show that the U.S. economy added 67,000 jobs in April, roughly one-third of the 178,000 jobs created in March. CNBC said the Bureau of Labor Statistics was expected to report a gain of just 55,000 jobs in April when it released its job count on Friday morning at 8:30 a.m. ET, enough to keep the jobless rate at a relatively low 4.3%.
Economists say the American labor market appears stuck in a “low-hire, low-fire” state that has kept the unemployment rate historically low, but has left those out of work struggling to find a new job. The recent artificial intelligence boom and the investment required to develop it is also making companies reluctant to hire.
A number of high-profile companies have cut jobs recently, including Morgan Stanley, Block, UPS, Amazon and Disney. Employers added fewer than 200,000 jobs last year, compared with about 1.5 million in 2024, according to FactSet.
Uncertainty, Costs, and the People Absorbing the Shock
Despite dwindling layoffs shown in government data, the Iran war, now in its third month, has injected uncertainty about how it will affect the U.S. and global economies even as Iran and the U.S. remain under a ceasefire agreement with growing optimism that an end to the war is near. U.S. financial markets have rebounded near record levels, and prices for a barrel of U.S. crude oil remain elevated around $90 per barrel. That is down from highs of $112 last month, but still 36% higher than before the war began.
Gas prices also are much higher since the war began, with AAA saying the national average Thursday was $4.56 a gallon, saddling businesses and consumers with higher costs. The burden lands where it always does: on workers, shoppers, and everyone forced to keep the machine running while the costs climb.
CNN said the labor market is in the throes of an evolution and quoted Nicole Bachaud, a labor economist at ZipRecruiter, as saying, “The labor market is absolutely transforming, and it’s not going to look the same as our pre-2020 trends.” Bachaud said there was not yet a clear picture of what the new normal is.
CNN said the U.S. job market and broader economy have been subject to a slew of exogenous shocks during the past six years, chief among them a once-in-a-century global pandemic, and that structural changes include an aging U.S. population, a sharp reduction in net immigration and technological innovations, notably artificial intelligence. It said labor force growth is slowing as Baby Boomers retire, industries such as health care and social services have expanded, Trump administration policies of immigration restrictions and mass deportations have shifted the trajectory of labor supply, and AI is reshaping jobs, industries and the economy.
The Apparatus Watches Its Own Numbers
CNN also said getting a firm read on the labor market in 2026 has been like riding a roller coaster, with the economy adding an estimated 160,000 jobs in January and losing 133,000 jobs in February before bouncing back to March’s total. It said the volatility can be partly attributed to weather, labor strikes, lower-than-typical post-holiday layoffs and recalibrations to how the Bureau of Labor Statistics estimates payroll changes at new and closed businesses, referred to as the birth-death model.
Joe Brusuelas, chief economist at RSM US, said the top-line payroll number could continue to fluctuate and that his firm had moved away from emphasizing any given month and was now looking at a smooth three-month average. From January through March, the average monthly gain was 68,333, and the consensus estimate of 67,000 jobs added was in line with that average. FactSet estimated the unemployment rate would remain at 4.3%.
CNN said April’s projected job growth was still running above trend, according to Gregory Daco, chief economist at EY-Parthenon, which was forecasting 45,000 jobs added last month. Daco wrote in a note to investors on Wednesday that the expected April gain should still surpass the breakeven pace needed to keep unemployment steady, meaning the unemployment rate was likely to tick down to 4.2%. CNN said the breakeven rate is the number of monthly jobs added to keep the unemployment rate stable, and that economists and policymakers are still trying to home in on that rate because of structural shifts in the economy. Brusuelas put his “speed limit for hiring” at about 25,000 jobs per month.
CNN said post-pandemic labor hoarding practices are still unwinding, high uncertainty triggered by inflation, tariffs, policy shifts, geopolitical developments and interest rates has stifled hiring and possibly ushered along some AI adoption, and the potential outstanding effects from the Iran war and oil shock on consumer spending patterns and input costs remain.
It said some of the frequent adjectives used to describe the labor market have been “solid,” “resilient” and “steady,” but consumer sentiment surveys show workers and job seekers are more downbeat. The “low-hire, low-fire” labor market has made it harder for some people to get jobs and has resulted in a slowdown of wage gains, which could soon be outstripped by inflation. CNN said the latest data released this week showed the ongoing labor market dynamics had not changed dramatically: the Job Openings and Labor Turnover Survey showed hiring bolted higher in March after falling to near-historic lows the month before, while job openings fell for the second consecutive month. It said weekly initial jobless claims had not escalated and remained near pre-pandemic levels.
CNBC said average hourly earnings were projected to have risen 3.8% annually in April, but that did not tell the story of where the gains were flowing. Bank of America’s data showed that in April the top one-third of earners saw 6% after-tax wage gains while the bottom group showed a gain of 1.5%. CNBC said that was particularly painful because the consumer price index rose 3.5% through March, indicating low earners saw a net loss of income. Tinsley said, “Just beneath the surface, distributions matter a lot here.” CNBC also said hiring disparities were appearing by business size, with small businesses seeing declines over the past three months.
CNBC said the crosscurrents were presenting challenges to Federal Reserve policymakers, who have grown increasingly split over the direction of interest rate policy. It said New York Fed President John Williams noted the “conflicting signs” between data such as weekly jobless claims showing stability and consumer sentiment surveys pointing to a softening picture. Williams said, “Much of the hard data points to stabilization, while some of the soft data suggest continued gradual slowing.” He added, “Together, these indicators suggest increasing labor market slack,” and said the dissonance in the hard and soft data may reflect the effects of a low-hire, low-fire labor market and should be monitored closely for signs that conditions are shifting. CNBC said investors are betting that the labor market’s relative stability, combined with elevated inflation, will keep the Fed on hold through the year, and that Williams repeated his view that monetary policy was “well-positioned” for the current climate.