At a Glance

  • The U.S. Department of Labor reported Thursday that initial jobless claims fell to their lowest level since mid-January, as businesses limit layoffs amid signs of solid economic growth.
  • For the week ending March 14, initial claims decreased by 8,000 to 205,000. Labor Department data showed that continuing claims rose to 1.86 million from 1.85 million for the week ending March 7.
  • Federal Reserve Chair Jerome Powell said Wednesday that the February unemployment rate of 4.4% is "stable," noting it is well below historical averages and that "both labor supply and demand have declined significantly over the past year due to immigration policy."

In-Depth Analysis

The median projections released by Fed officials on Wednesday show the unemployment rate holding at 4.4% this year, falling to 4.3% next year, and further declining to 4.2% in 2027.

Despite layoff announcements from several well-known companies such as Amazon, Meta, UPS, and Oracle, the job market has remained broadly stable this year.

Powell said: "We're in a kind of equilibrium where you have zero net job growth." He also noted that both hiring and layoff activity are unusually subdued.

"It does have a sense of downside risk, and it's not a really comfortable balance," he added, noting that labor demand has moderated while immigration restrictions and declining labor force participation have slowed labor force growth.

"There are quite a few participants on the FOMC who are concerned about very low levels of job creation," Powell said. "This is something we are watching closely and are concerned about."

Powell noted that the job market is supported by an economy "expanding at a solid pace," with consumer spending "resilient" and business fixed investment also rising.

According to the median projections of Fed officials, gross domestic product (GDP) is expected to grow 2.4% this year and 2.3% in 2027. In their December projections, they had expected economic growth of 2.3% this year.

The Atlanta Fed predicted Thursday that the economy could grow at an annualized rate of 2.3% in the first quarter of this year.

The Fed decided Wednesday to hold its key interest rate steady with one dissenting vote, while noting uncertainty about the economic impact of the war with Iran.

In their median projections, central bank officials expect the federal funds rate to be cut once this year by 25 basis points, consistent with their December projections.

Fed officials expect their preferred inflation gauge—the personal consumption expenditures (PCE) price index excluding volatile food and energy prices—to rise to 2.7% by the end of 2026, 0.2 percentage points higher than their December projections.

Powell said Wednesday that the risk of higher inflation has not outweighed the risk of higher unemployment.

The U.S. Congress has authorized the Fed to ensure price stability and achieve maximum employment.