US Jobless Claims Rise Slightly as Iran War Clouds Economic Outlook

New applications for unemployment benefits in the United States rose slightly last week, though layoffs remain historically low despite mounting economic uncertainty linked to the ongoing Iran war.

According to the Labor Department, initial jobless claims increased to 215,000 for the week ending May 23, up from 210,000 the previous week.

The four-week moving average, which helps smooth short-term volatility, climbed to 209,000.

Economists say the increase is modest and does not yet signal significant weakness in the labor market.

“Initial claims are still impressively low, near historic lows,” said Carl Weinberg, chief economist at High Frequency Economics.

US labor market remains stable despite uncertainty

The number of Americans applying for unemployment benefits has largely remained within the 200,000 to 250,000 range since the U.S. economy recovered from the COVID-19 recession.

The latest figures suggest most employers are still avoiding major layoffs.

However, hiring activity has slowed considerably compared to the rapid recovery years that followed the pandemic.

Employers added fewer than 10,000 jobs per month on average last year, marking the weakest hiring pace outside recession periods since 2002.

Job creation improved slightly during the first months of 2026, averaging 76,000 new positions per month between January and April.

That remains well below the average monthly gains seen in recent years, particularly during the post-pandemic economic rebound.

Iran war pushes fuel prices higher

The conflict involving Iran has added fresh pressure to the U.S. economy, especially through rising energy prices.

Following U.S. and Israeli strikes, Iran disrupted shipping through the Strait of Hormuz, one of the world’s most important oil transit routes.

The closure caused major supply disruptions across global energy markets and pushed fuel prices sharply higher.

According to AAA, average gasoline prices in the United States surged to $4.43 per gallon, compared to $2.98 before the conflict began.

Higher fuel and transportation costs are increasing pressure on households and businesses already facing elevated living expenses.

Hiring slowdown may not trigger higher unemployment

Despite slower hiring, the unemployment rate has remained relatively stable at 4.3%.

Economists say demographic shifts, including retirements among Baby Boomers and stricter immigration policies introduced under Donald Trump, mean the economy now requires fewer new jobs each month to maintain stable unemployment levels.

Analysts describe the current labor market as “low-hire, low-fire,” with companies reluctant to aggressively expand hiring but also avoiding widespread layoffs.

Investors and policymakers are now watching closely to see whether higher oil prices and prolonged geopolitical instability begin affecting consumer spending and business confidence later this year.