U.S. jobless claims fall below 200,000 for first time since November 2025

U.S. jobless claims dropped to 198,000 last week, a level not seen since November, after weeks of choppy holiday data. The fall caught almost everyone off guard.

New filings for unemployment benefits declined by 9,000 in the week ended January 10, according to new data released by the Labor Department.

The U.S. rarely sees claims below 200,000. It has only happened a few times in recent years. The four‑week moving average also slipped, landing at 205,000, which is the lowest reading in two years. That average is used to smooth out short‑term noise, especially around holidays. Even with that filter, the trend still pointed down.

Holiday timing still matters. Before seasonal adjustments, initial claims jumped, which is normal for January. The biggest unadjusted increases came from Texas, California, and Michigan. After adjustments, the national total still fell. That split is common this time of year and does not change the overall reading.

The U.S. also saw a drop in continuing claims. That figure, which tracks people already receiving benefits, declined to 1.88 million in the prior week. Fewer people staying on benefits suggests workers who lose jobs may be finding new ones faster, or fewer people are losing jobs at all.

US consumer sentiment is at a 4-month high

Consumer views in the latest University of Michigan survey showed confidence around jobs remains weak. Nearly two‑thirds of respondents said they expect unemployment to rise over the next year. That view has held steady in recent weeks. Worry about job losses is stronger among higher‑income and higher‑educated households than among other groups.

Price expectations stayed sticky. Consumers said they expect prices to rise 4.2% over the next year, unchanged from the previous month. For the next five to ten years, they see costs rising 3.4% a year. The prior reading there was 3.2%.

High living costs, fewer perceived job openings, and doubts about wage growth have kept sentiment just above a record low. Spending, however, has stayed solid and continues to support growth.

The U.S. expectations index rose to 55, a five‑month high. The survey showed better views of both the near‑term and longer‑term outlook. That improvement came even as labor market worries remained widespread.

Federal Reserve officials cut interest rates at their final three policy meetings in 2025. The aim was to prevent a sharp labor slowdown. Policymakers are now expected to keep rates unchanged later this month while they review fresh inflation and employment data. Inflation has cooled, but it still sits above the 2% target.

The U.S. housing market also saw movement last week. Mortgage rates fell to some of the lowest levels in years, triggering more activity. The contract rate on a 30‑year mortgage dropped 7 basis points to 6.18% in the week ended January 9.

That was the lowest level since September 2024 and among the lowest since 2022. The rate on a five‑year adjustable mortgage slid to 5.42%, the second‑lowest reading since May 2023.

Lower borrowing costs pushed demand higher. Purchase applications jumped nearly 16%, the second‑highest level since February 2023. Refinancing surged more than 40%, the largest weekly increase since September.

Large swings like this often happen around holidays, but the timing added fresh momentum to a housing market that has been moving slowly.

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