The spike in initial jobless claims last week was not as concerning as the gradual increase in continuing claims, which have reached their highest level since 2021.
While initial claims data can often be volatile, the continuing claims metric is much less sensitive to week-to-week noise. Since April, the number of continuing claims has broken the 1.9 million threshold twice, including last week—a level higher than any seen in 2019, before the pandemic.
It is likely that the labor market is entering a new phase that will keep workers on the sidelines much longer. This is not the best time for workers to quit a job and look for a new one, as most businesses are freezing hiring plans while awaiting more clarity on tariffs.
If the headwinds from tariffs continue to spread across the economy, consumer spending on business profits will be affected, which could force companies to begin laying off workers.
Read more of RSM’s insights on the economy and the middle market.
Corporate profits in the first quarter fell by the most since 2020, according to Bureau of Economic Analysis data released Thursday. That decline was largely driven by weaker consumption, not tariffs. In the second quarter, profit margins should continue to be compressed as tariffs take hold and spending falls further.
