Claims Dip, Rolls Swell: Dec. 18 Release Shows **224,000** Initial Claims, But Continuing Claims Jump **+67,000**

PRESS RELEASE SUMMARY

The December 18, 2025 press release says the labor market just tightened. The headline: seasonally adjusted initial claims fell 13,000 to 224,000 for the week ending December 13. The data beneath the headline says something else: seasonally adjusted insured unemployment rose 67,000 to 1,897,000 in the prior week (ending December 6), with the insured unemployment rate flat at 1.2%. That’s a “lower flows, higher stock” picture—hardly a clean victory lap.

Here’s what the data reveals:

• Initial claims: 224,000 (-13,000 w/w), but the 4-week average rose to 217,500 (+500) after upward revisions to the prior week’s average (+250).

• Continuing claims: 1,897,000 (+67,000 w/w), IUR 1.2% (unchanged).

• Seasonal adjustment flipped the narrative: unadjusted initial claims fell -19.0% (more than expected), while unadjusted continuing claims fell -3.8% (less than expected), yielding a seasonally adjusted increase in continuing claims.

• All programs: total continued weeks claimed rose +262,500 to 1,993,823 (week ending Nov 29)—not consistent with a simple “improving” headline.

• Large state swings (California, Illinois, New York, Texas, Georgia) were partially reversed but remain notable; dispersion is showing up in insured unemployment rates at the state level.

The Split Decision: Initial Claims Down, Rolls Up

The headline focuses on the 224,000 initial claims print. It’s clean, familiar, and—in isolation—bullish for growth. The problem: the stock of people actually drawing benefits moved the other way. Seasonally adjusted insured unemployment rose +67,000 to 1,897,000 for the week ending December 6. The insured unemployment rate stayed at 1.2%, but that masks a meaningful increase in beneficiaries.

This divergence isn’t a rounding error. It tells us the pace of new layoffs eased last week, but exits from unemployment insurance slowed more, leaving more people on the rolls. In other words: flows improved, stocks deteriorated. That is not the same thing as labor-market strengthening.

The Revision Assist

Revisions nudged the optics. The prior week’s initial claims were revised up by 1,000 (236,000 to 237,000). The prior 4-week average was revised up by 250 (216,750 to 217,000), which helped set up today’s 4-week average increase to 217,500. Not a big change, but enough to convert “flat” into “edging up.”

On the continuing side, the prior insured unemployment level for November 29 was revised down by 8,000 (1,838,000 to 1,830,000). The next week’s jump to 1,897,000 therefore looks larger on a revised base—an increase of 67,000 that’s hard to square with a triumphant “claims fell” narrative.

Seasonal Math That Actually Matters

Unadjusted initial claims plunged -59,903 (-19.0%), far more than seasonal factors anticipated (-44,785 or -14.2%). That overperformance turns into a bigger seasonally adjusted improvement for initial claims. Conversely, unadjusted continuing claims fell -75,048 (-3.8%), less than the seasonal pattern expected (-140,935 or -7.2%). After adjustment, that shortfall reads as a rise in seasonally adjusted continuing claims.

Translation: the seasonal model helped the headline but hurt the underlying. This is exactly what holiday weeks do—especially around Thanksgiving and early December, when hiring/layoff timing, workshare programs, and reporting quirks add noise.

State-Level Whiplash and Dispersion

The national headline compresses large state moves that tell a different story:

• Week ending December 6 saw sharp rises: California +14,258, Illinois +11,074, New York +10,346, Texas +8,206, Georgia +6,333.

• Week ending December 13 reversed some of that: Illinois -7,132, New York -5,513, Texas -3,963, Georgia -4,649. Big, but still noisy.

Meanwhile, unadjusted insured unemployment rates show dispersion: Washington 2.5, New Jersey 2.4, California 2.3, Minnesota 2.2, Massachusetts 2.1, Puerto Rico 2.0, Rhode Island 2.0, Alaska 1.9, Oregon 1.9, Nevada 1.8, New York 1.8. That clustering above the national 1.2% implies pockets of labor-market stress—exactly the kind of breadth deterioration you don’t see in a single national headline.

Note the fine print: advance state claims are not directly comparable week to week due to adjustments (workshare, liability vs. residence). The broader message stands—volatility is high, and the national aggregate hides dispersion.

The Monthly Trajectory: Holiday Ripples, Not a Turn

November’s trend was a steady downshift in initial claims followed by a holiday air pocket:

• Initial claims (seasonally adjusted): Nov 1 229k, Nov 8 228k, Nov 15 222k, Nov 22 217k, Nov 29 192k.

• Insured unemployment: Nov 1 1.946m, Nov 8 1.953m, Nov 15 1.944m, Nov 22 1.937m, Nov 29 1.830m.

• Insured unemployment rate slipped from 1.3% to 1.2% by Nov 29.

Then December whiplashed: Dec 6 initial claims jumped to 237k, and insured unemployment to 1.897m; Dec 13 claims eased to 224k, with the 4-week average at 217,500. The mid-year context matters: 2025 saw recurring oscillations in the 220k–240k range, with spikes (250k on June 7, 264k on Sept 6), and insured unemployment hovering near ~1.9m most of the year. Today’s mix fits that pattern: stable headline claims, sticky continuing rolls.

Numbers Behind the Narrative

Also note: total continued weeks claimed across all programs rose +262,500 to 1,993,823 (week ending Nov 29). That rise undercuts the simplistic “claims fell, all clear” story.

What This Means for Markets

• Rates: The mix of lower initial claims and higher continuing claims keeps the soft-landing trade intact but dents the “re-acceleration” narrative. Front-end rates should stay sensitive to any follow-through in continuing claims; a modest bull steepener bias makes sense if rolls keep building while claims stay rangebound.

• Equities: Labor-sensitive small caps and unprofitable growth names remain vulnerable if continuing claims grind higher and wage stickiness persists. Large-cap quality with margin protection and pricing power looks more defensible.

• Credit: Investment-grade should ride stable claims; high yield is more exposed to state-level stress pockets and dispersion. Favor BB/B quality over CCCs until continuing claims re-tighten.

• Sectors: Watch logistics, staffing, and consumer discretionary. A rising rolls backdrop can pressure hours and overtime, softening demand into Q1 even if layoff announcements remain subdued.

• Macro path: The insured unemployment rate at 1.2% keeps the Fed patient. If continuing claims stay near ~1.9m and all-program rolls expand, it strengthens the case for gradual easing later in 2026 rather than an urgent pivot. The holiday distortion caveat applies—but the direction of travel matters.

The Investor Takeaway

• Don’t trade the headline alone. Initial claims at 224,000 looks healthy, but continuing claims +67,000 to 1,897,000 and the rise in all-program rolls to 1,993,823 complicate the picture.

• Watch the right indicators next: continuing claims, state-level insured unemployment rates (especially Washington, New Jersey, California), and the all-program series. If rolls rise for another two prints, the market will notice.

• Position for dispersion. Favor quality within credit and equities; underweight the most labor-cost-sensitive small caps. Rates: keep a measured bull-steepener bias via intermediates versus the front end.

• Expect noise. Seasonal adjustment dynamics just showed you how holiday quirks can flip the signal. Use it to fade overreactions, not to confirm a trend.

The December 18 release wasn’t a clean read on labor strength—it was a split screen. Flows improved, stocks worsened. Until the rolls come down, treat “224k” as stability, not acceleration—and position for a market that still rewards quality, cash flow, and patience.