US Initial Jobless Claims Hit Highest Of 2025 As DC Layoffs Jump

Applications for US unemployment benefits rose to the highest this year, amid an increase in job-cuts announcements at corporations and federal agencies.

Initial claims increased by 22,000 to 242,000 in the week ended Feb. 22, matching the highest level since October, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 221,000 applications.

The pickup in new applications coincides with a number of staff-reduction plans at high-profile corporations such as Starbucks Corp., Meta Platforms Inc. and Southwest Airlines Co. Economists have also been on the lookout out for the ripple effects from the firings of workers across federal agencies by the Trump administration. 

In Washington, DC, applications rose to the highest level since March 2023, continuing an uptrend that started at the beginning of the year. Claims in Maryland and Virginia, where there is also a high concentration of federal workers, both fell. 

Claims filed by fired federal workers are generally not included in the overall initial claims numbers. They are reported separately and that figure was little changed for the week ended Feb. 15, the latest available. But the overall initial claims data would include workers who lost their jobs at contractors and other entities that do business with the government or get federal funding. 

Moves to shrink the workforce by Elon Musk’s Department of Government Efficiency probably boosted applications last week by no more than 5,000, according to Pantheon Macroeconomics.

Overall, demand for workers has moderated, although layoffs at the national level have remained relatively subdued. Continuing claims, a proxy for the number of people receiving benefits, decreased to 1.86 million in the week ended Feb. 15.

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The four-week moving average of new applications, a metric that helps smooth out fluctuations from week-to-week, increased to 224,000, also the highest this year.

Before adjusting for seasonal factors, initial claims fell last week. California, Kentucky and Tennessee saw the largest declines. Massachusetts and Rhode Island had large gains.

The second estimate of fourth quarter gross domestic product, published Thursday by the Bureau of Economic Analysis, showed economic growth remained solid at 2.3% on an annualized basis, but a key measure of inflation was revised up from the previous estimate. 

A separate report by the National Association of Realtors showed that pending sales of existing US homes slumped to a record low in January as severe winter weather slowed activity and consumers balked at high prices and mortgage rates ahead of the spring selling season.

US stocks pared gains while Treasury yields were little changed.