Key Takeaways
The number of continuing unemployment claims rose to its highest in nearly three years last week, adding to recent evidence the job market is slowing down.
Layoffs remain low, indicating the economy is in a no hiring, no firing limbo. Employers are cutting back on hiring as tariffs impose new costs, several economists said.

Official government data is starting to show what anyone looking for work has known for months: the labor market is getting tough for job seekers.

The latest red flag came Thursday when the Department of Labor said 1.97 million people were collecting unemployment insurance the week ending Aug. 9, the highest since November 2021.

Several economists pointed to the data as evidence that President Donald Trump’s tariffs are starting to become a serious drag on the economy.

Company executives have told surveyors they’re shelving hiring plans because of uncertainty about how the wide-ranging import taxes will affect prices and business outlook. Companies that import materials and products must decide how to pay for the extra costs imposed by tariffs, and for some, trimming payrolls is the answer.

“It’s very tough to find a job right now, regardless of your age or experience,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. “The main issue for job seekers is the tariffs. Companies are under pressure to keep profits high, and they are passing along more of the tariff costs to consumers and looking carefully at whether to reduce their workforce size to cut costs.”

The unemployment claims are only one of several recent indicators of a hiring slowdown. Hiring had its worst three-month stretch since the pandemic hit in May through July, the Bureau of Labor Statistics said earlier this month. While companies have avoided mass layoffs so far, keeping the overall unemployment rate low, the job market has gotten dismal for anyone looking for a position.

“Taken together at face value, initial and continued claims indicate that firms are not laying off workers, but they aren’t hiring either,” Robert Fry, an independent forecaster, wrote in a commentary last week, before the latest unemployment claim figures were released. “If you have a job, you’re OK (so far). If you don’t have a job, you’re out of luck.”