US Jobless Claims Rise to 215,000; Layoffs Low Amid Iran War
WASHINGTON — More Americans filed for unemployment benefits last week, but layoffs remain historically low even as the Iran war drives up energy costs and clouds the economic outlook. The Labor Department reported Thursday that weekly jobless claims rose to 215,000 for the week ending May 23, up from 210,000 the prior week, according to AP News.
The four-week moving average of claims, which smooths out week-to-week volatility, rose by nearly 6,300 to 209,000. The total number of Americans collecting jobless aid also edged higher, increasing by 15,000 to 1.79 million for the week ending May 16.
A Resilient but Cautious Labor Market
Despite the uptick, the claims data signals that U.S. employers have largely refrained from widespread layoffs even as the economy contends with the compounding pressures of a major military conflict. Carl Weinberg, chief economist at High Frequency Economics, described the increase as minor in context.
“Initial claims are still impressively low, near historic lows. The uptick from last week to this week is trivial in a labor market of 159 million workers.”
Since emerging from the pandemic recession in 2020, weekly jobless claims have stabilized in a range of roughly 200,000 to 250,000 — a level that historically reflects a healthy labor market.
However, the low layoff numbers tell only part of the story. While companies are not cutting jobs aggressively, they are not adding many either. Last year, U.S. employers added fewer than 10,000 jobs per month — the weakest hiring outside of recession years since 2002. Hiring has picked up modestly in 2026, averaging 76,000 jobs per month from January through April, but that remains well below the 122,000 monthly average in 2024 and the roughly 400,000 per month during the post-COVID recovery from 2021 through 2023.
The unemployment rate held steady at 4.3% in April, historically low but up from the 3.4%-3.7% range that prevailed through much of 2023. As AP News noted, structural factors — including President Trump’s immigration crackdown and ongoing Baby Boomer retirements — have lowered the monthly “break-even rate” of hiring needed to keep unemployment stable, potentially to as low as zero.
The Iran War’s Economic Shadow
The jobless claims data arrives against the backdrop of the 2026 Iran war, which began on February 28 when the United States and Israel launched airstrikes on Iran. The conflict has triggered one of the most severe disruptions to global energy markets in decades.
Iran responded to the attacks by effectively closing the Strait of Hormuz, a 21-mile-wide chokepoint through which approximately 20% of the world’s traded oil normally passes. As CBS News reported, Brent crude oil surged 44% to $105 per barrel, and U.S. gasoline prices climbed from $2.98 per gallon before the war to an average of $4.43 per gallon by late May.
Inflation has also accelerated. The Consumer Price Index reached 3.3% in March 2026, the highest since May 2024, driven largely by surging energy costs. Economists warn that the Personal Consumption Expenditures price index could hit 4% by year-end — double the Federal Reserve’s 2% target — according to Scott Lincicome of the Cato Institute.
Mark Zandi, chief economist at Moody’s Analytics, told CBS News that the economic damage may already be locked in.
“I think the damage has already been done, in part because there’s no going back on oil prices, at least not any time in the near future.”
Broader Pressures on Households
The war’s economic impact extends well beyond the gas station. Higher diesel prices are increasing the cost of transporting goods, which economists say will push up prices on groceries and other essentials. Zandi warned that “anything that’s put on a truck is going to cost more — that goes from groceries to Amazon packages.”
Disruptions to natural gas supplies — a key input for fertilizer production — could further pressure food prices. The International Energy Agency has predicted that global natural gas supplies will remain tight for two years.
Consumer spending has held up so far, but Bank of America data shows that most of the growth is being driven by higher-income households with stock market exposure, masking the strain on lower-income families facing higher costs for fuel, food, and everyday goods. EY-Parthenon projects the war could drag GDP growth down by 0.3 percentage points to 1.8% for 2026.
What to Watch
On the same day the jobless claims data was released, U.S. and Iranian negotiators reached a tentative deal to extend the ceasefire and begin new nuclear talks. If a broader agreement can be reached and the Strait of Hormuz reopens, oil prices could ease, providing relief to consumers and businesses alike.
But economists caution that even under optimistic scenarios, the effects of the war will linger. Lydia Boussour, senior economist at EY-Parthenon, noted that “full normalization will still take time, especially when it comes to supply chains, when it comes to energy capacity.”
For now, the U.S. labor market remains in a peculiar state — resilient enough to avoid widespread layoffs, yet not strong enough to generate robust hiring. Whether that “low-hire, low-fire” equilibrium can hold depends in large part on whether the Iran conflict de-escalates before the economic pressures become too great to absorb.