A Low Fire, Low Hire Economy

Focus NJ

On Oct 2, 2025

Nearly 2 million Americans were drawing unemployment benefits in early August – a level not seen since November 2021 – according to July 2025 U.S. Labor Department data. This surge in continuing claims suggests more workers are struggling to transition back into employment, even though initial layoffs remain relatively contained.

New filings (otherwise referred to as initial jobless claims) rose modestly by 7,000, reaching 226,000 for the week ending Aug. 2. These figures remain within the historically normal range and underscore a market that’s more “slow-to-fire” than outright weak.

The persistence of elevated continuing claims, even with stable initial claims, smacks of a labor market losing momentum. As Daniel Zhao, chief economist at Glassdoor, explains: “It means it’s hard for unemployed people to get back into the workforce, but … they might have to settle for a worse job.”

Two overarching forces are fueling this softening: economic uncertainty and policy instability. Higher tariffs, federal spending cuts, and stringent immigration changes are forcing employers into a holding pattern. They are hesitant to expand, yet cautious about cutting staff. For some industries, like construction, retail, and manufacturing, this has translated into slower project starts, tighter hiring budgets, and delayed capital investments.

Meanwhile, monthly jobs data paints a disappointing picture: just 73,000 U.S. jobs were added in July, well below forecasted levels, with May and June revised downward by a combined 258,000 jobs. These revisions raise fresh concerns about whether the job growth of earlier this year was overstated – and whether the slowdown is deeper than initially believed.

Taken together, these trends suggest a “low-hire, low-fire” labor environment, where workers face longer job searches, more competition for openings, and the possibility of accepting downgraded roles to re-enter the workforce. For job seekers, this could mean adjusting salary expectations or broadening the scope of positions they pursue.

For policymakers and business leaders, the question is not just how many people are losing jobs this week, but how long those without work stay unemployed. If continuing claims remain elevated while hiring stalls, the Federal Reserve may need to reconsider its rate path ahead of its next policy meeting. In short: the labor market is not collapsing. But it is no longer buoyant either. And that shift, subtle as it may be, should matter to anyone watching the economy’s next turn.

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