The number of Americans filing for jobless benefits last week hits
263,000, most in nearly 4 years
[September 12, 2025] By
MATT OTT
WASHINGTON (AP) — In another grim sign for the U.S. labor market,
jobless claim applications jumped to their highest level in almost four
years last week, virtually assuring the Federal Reserve will cut its
benchmark interest rate next week.
The number of Americans filing for unemployment benefits for the week
ending Sept. 6 rose by 27,000 to 263,000, the Labor Department reported
Thursday. That’s the most applications since the week of Oct. 23, 2021
and well above the 231,000 new applications economists forecast. It's
also the biggest week-to-week increase in almost a year.
Most analysts were already forecasting an interest rate cut after Fed
Chair Jerome Powell signaled as much at a conference of central bankers
three weeks ago. However, another report Thursday showing that consumer
inflation remains elevated could complicate the Fed's dual mandate of
keeping prices in check while supporting a healthy labor market.
Typically the Fed would cut its key rate when unemployment rose in an
attempt to spur more spending and growth. But it would do the opposite
and raise rates — or keep them unchanged — in the face of rising
inflation.
“The hot inflation print will not likely change the Fed’s plan to cut
rates in September, but it’s possible the Fed will hold in October if
inflation expectations no longer look well-contained,” said Jeffrey
Roach, chief economist for LPL Financial.
Fed officials recently have expressed greater concern about the
deteriorating labor market than inflation, and while a rate cut could
spur economic growth and boost the job market, economists fear it could
push inflation even farther above the Fed’s target of 2%.
Earlier this week, the Bureau of Labor Statistics issued a massive
preliminary revision of U.S. job gains for the 12 months ending in
March, further evidence that the labor market has not been as strong as
previously thought.
The BLS’s revised figures showed that U.S. employers added 911,000 fewer
jobs than originally reported in the year ending in March 2025, with the
biggest weakness coming from the leisure and hospitality sector,
professional and business services and retail. The report showed that
job gains were tapering long before President Donald Trump rolled out
his far-reaching tariffs on U.S. trading partners in April.
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 The department issues the revisions
every year, intending to better account for new businesses and ones
that had gone out of business. Final revisions will come out in
February 2026.
The updated figures came after the agency reported Friday that the
economy generated just 22,000 jobs in August, well below the 80,000
economists were expecting.
Also last week, the government said that U.S. employers advertised
7.2 million job openings at the end of July, fewer than economists
had forecast and the first time since April of 2021 that there were
more unemployed Americans than job postings.
Last month’s July employment report, which showed job gains of just
73,000 and included huge downward revisions for June and May, sent
financial markets spiraling and prompted Trump to fire the head of
the agency that compiles the monthly data.
The various labor market reports have bolstered fears that Trump’s
erratic economic policies, including the unpredictable taxes on
imports, have created so much uncertainty that businesses are
reluctant to hire.
Broader U.S. economic growth has weakened so far this year as many
companies have pulled back on expansion projects amid the
uncertainty surrounding the impacts of the tariffs. Growth slowed to
about a 1.3% annual rate in the first half of the year, down from
2.5% in 2024.
Thursday's unemployment benefits report showed that the four-week
average of claims, which evens out some of the week-to-week
volatility, rose by 9,750 to 240,500.
The total number of Americans collecting unemployment benefits for
the previous week of Aug. 30 was unchanged at 1.94 million.
Weekly applications for jobless benefits are considered a proxy for
layoffs and have mostly settled in a historically low range between
200,000 and 250,000 since the U.S. began to emerge from the COVID-19
pandemic nearly four years ago.
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