US jobless claims rise to 200,000 as labor market shows cracks

Initial U.S. jobless claims rose to 200,000 for the week ended May 2, a figure that remains near historical lows but lands in an economy grappling with uncertainty from the war in Iran and significant, targeted shifts within the federal workforce.

"We know who’s being targeted, and it’s Black workers and women, and the intersection of those is Black women," said Jasmine Tucker, vice president of research at the National Women’s Law Center, regarding a recent wave of federal job cuts.

The Labor Department's report on Thursday showed first-time filings for unemployment benefits increased from a revised 190,000 in the prior week. The result came in below the Bloomberg consensus estimate of 205,000. Continuing claims, which track the unemployed population still seeking work, ticked down to 1.76 million in the week ended April 25, beating economists' estimates of 1.8 million.

While the top-line data suggests a resilient labor market, the stability masks a turbulent picture for thousands of government workers. The numbers are being closely watched by investors for signs of cooling that might influence the Federal Reserve's policy path, with the more comprehensive monthly jobs report due Friday.

Federal Job Cuts Skew Stable Picture

Beneath the surface of the low weekly numbers, a dramatic restructuring of the federal workforce is creating significant economic hardship for specific demographics. An initiative known as the "Department of Government Efficiency," or DOGE, has eliminated almost 300,000 federal jobs in 2025. An analysis by the National Women’s Law Center found that Black women, who make up 12% of the federal labor force, accounted for a stunning 33% of those cuts.

The cuts have been concentrated in agencies related to housing, veterans affairs, education, and health and human services, as well as roles focused on diversity, equity, and inclusion (DEI). "The whole point of my role was diversity and equity — giving equitable access to our national forests," said Jenniqual Johnson, a former U.S. Department of Agriculture Forest Service employee who lost her $100,000-a-year job. The economic fallout for these displaced workers is severe, with many, like former USAID officer La’Nita Johnson, seeing their income fall by more than half.

Broader Market Context

The labor data arrives as markets are weighing mixed signals. Hopes for a U.S.-Iran peace deal to end the near 10-week war have pushed Brent crude oil futures below $100 a barrel, easing inflation concerns. The drop in energy prices has provided a tailwind for risk assets, with the S&P 500 and Nasdaq 100 touching record highs this week.

However, the underlying labor market turmoil highlights a growing divergence. While private sector job growth, measured by a separate ADP report, exceeded expectations with 109,000 jobs added in April, the high-paying government jobs being eliminated are not easily replaced. As one displaced worker, Constance Franklin, noted after losing her $144,000 salary at the CDC, "Moving from the federal to the private sector is hard because the work doesn’t often translate."

This article is for informational purposes only and does not constitute investment advice.