U.S. Jobless Claims Drop Again as Labor Market Defies Expectations

Source: Coindoo Original Title: U.S. Jobless Claims Drop Again as Labor Market Defies Expectations Original Link: https://coindoo.com/u-s-jobless-claims-drop-again-as-labor-market-defies-expectations/ U.S. jobless claims continued to move lower at the end of December, reinforcing the picture of a labor market that remains resilient despite elevated interest rates.

Initial claims fell by 16,000 to 199,000 in the week ending December 27, marking the third consecutive weekly decline, according to data released by the Labor Department.

The drop surprised economists, who had expected claims to rebound after the holiday period. A survey cited by The Wall Street Journal had pointed to an increase toward 220,000, compared with a prior estimate of 214,000. Instead, filings fell to their lowest level in weeks, suggesting layoffs remain limited across much of the economy.

Seasonal distortions are common in late December, but economists note that claims staying below the 200,000 mark typically signal stable labor conditions. Hiring has cooled from its post-pandemic peak, yet the data indicates that employers are still holding on to workers, even as growth moderates.

The labor report arrives shortly after the latest policy meeting of the Federal Open Market Committee, where officials reiterated a cautious stance on easing. While policymakers acknowledged progress on inflation, they emphasized that rate cuts will depend on clearer signs of cooling across both prices and employment.

Importantly for markets, the FOMC did not push back against expectations for gradual rate reductions further out on the horizon. Investors increasingly see 2026 as a window for more meaningful easing, assuming inflation continues to trend lower and the labor market shows broader signs of slowing rather than sudden deterioration.

For now, the combination of falling jobless claims and a patient Federal Reserve underscores a delicate balance. The economy appears strong enough to avoid near-term policy urgency, while still leaving the door open for rate cuts in 2026 if momentum fades in a controlled way rather than through a sharp downturn.