U.S. Jobless Claims Keep Climbing

The recent uptick in continuing jobless claims is accompanied by a broader cooling in the U.S. labor market. The national unemployment rate edged up to 4.4% in February 2026. More strikingly, the economy unexpectedly lost 92,000 jobs that month, a stark contrast to the modest gains economists had predicted and a significant downturn from the 126,000 jobs added in January. The February job losses were widespread across several sectors. The healthcare industry, which had been a consistent source of job growth, saw a decline of 28,000 positions, partly attributed to strike activity. The information and transportation and warehousing sectors also each shed 11,000 jobs, while federal government employment continued its downward trend with a loss of 10,000 jobs. Adding to the concern, the job figures for previous months were revised downwards. Combined, the employment numbers for December 2025 and January 2026 were 69,000 lower than initially reported, suggesting the labor market was weaker than previously thought heading into the new year. The number of long-term unemployed individuals, those jobless for 27 weeks or more, stood at 1.9 million in February, up from 1.5 million a year prior. These trends are making it more difficult for those out of work to find new employment. Continuing claims, while still below the historic highs seen during the COVID-19 pandemic and the Great Recession, have been hovering near their highest levels since late 2021. In the week ending February 14, states with the highest insured unemployment rates included Rhode Island, New Jersey, and Massachusetts. In Rhode Island, recent layoffs have occurred in transportation, warehousing, and healthcare, among other sectors. The combination of a softening labor market and persistent inflation has some economists concerned about the risk of "stagflation" – a period of slow economic growth and high inflation. This presents a significant challenge for the Federal Reserve. The central bank is now in a difficult position, having to weigh the need to support employment against its mandate to maintain price stability. The latest Job Openings and Labor Turnover Survey (JOLTS) data, which provides insights into labor demand, showed a downward trend in job openings at the end of 2025. The next JOLTS report, with data for January 2026, is scheduled for release on March 13th and will be closely watched for further signs of the labor market's direction. Federal Reserve officials are navigating a complex economic landscape. While some have indicated that further interest rate cuts might be necessary if inflation continues to decline, others have expressed a more cautious approach, with some even suggesting that rate increases could be back on the table if inflation remains stubbornly high. The recent weak jobs report, coupled with rising oil prices, has intensified the debate within the Fed. Small businesses, which are a major engine of job creation, have also shown signs of caution. A recent survey indicated that expectations for revenue and employment growth for the year ahead have declined to their lowest levels since 2020. The top reported challenges for these businesses were hiring and retaining qualified staff and the rising costs of goods, services, and wages.