Despite rising uncertainty, US applications for unemployment benefits will decline

The weekly application of unemployment benefits is considered a layoff proxy and has bounced back primarily in the health range of 200,000-250,000 since Covid-19 destroyed the economy and wiped out millions of jobs.

Despite Trump suspending or pulling back many of his tariff threats, concerns remain about a global economic slowdown that could potentially promote the US labor market, which has been a pillar of the US economy for many years.

On Wednesday, the Federal Reserve held benchmark lending rates at 4.3% in three consecutive meetings after three consecutive cuts at the end of last year.

Federal Reserve Chairman Jerome Powell said the risk of both higher unemployment and inflation is increasing.

Powell said tariffs have weakened consumer and business sentiment, but the data has yet to show significant harm to the economy.

Trade development is underway this week, with the US and the UK expected to announce the trade agreement framework later on Thursday.

There were no new deals with America’s biggest trading partners, such as Canada, Mexico or China. Trump maintains the highest tariffs in China, raising tensions between the two biggest economies of the world. Washington and Beijing are sending authorities to Switzerland this weekend for the first round of trade talks.

Trump is trying to rebuild the global economy by dramatically increasing import taxes to rejuvenate the US manufacturing sector.

The US has already begun to shrink, and the economy has shrunk by 0.3% at an annual pace from January to March, as Trump’s trade war disrupts businesses. First quarter growth was slowed by a surge in imports as US companies tried to bring in foreign goods before Trump’s massive tariffs came into effect.

This was the first quarterly decline in GDP in three years.

Trump’s promise to significantly reduce the federal workforce, like his pledge to enact tariffs, occupy much of the early weeks of his presidency, and is still in motion.

It is not clear when the work ordered by government efficiency has been cut, namely “doge,” led by Elon Musk, will emerge in weekly layoff data. But even outside the Washington, D.C. area, federal staff cuts are already felt.

Despite showing signs of weakening over the past year, the labour market remains strong with abundant jobs and relatively few layoffs.

Last week, the government reported that US employers added an incredibly strong 177,000 jobs in April. However, the unemployment rate, which has been held at the historically healthy 4.2%, is predicted by many economists that the negative effects of the trade war will be realized for American workers this year.

Companies that announced jobs this year include Workday, Dow, CNN, Starbucks, Southwest Airlines and Facebook parent company Meta.

The Labor Bureau reported that the average four-week billing average would lead to a portion of the weekly turn from 1,000 to 227,000.

On April 26, the total number of Americans receiving unemployment benefits fell to 1.88 million, down 29,000.