Claims Fall, Durations Rise: December 29 Release Masks a Softer Labor Pulse Beneath a 214,000 Headline

PRESS RELEASE SUMMARY

Dated December 29, 2025, the latest jobless claims release leads with a tidy headline: seasonally adjusted initial claims fell to 214,000 (down 10,000) in the week ending December 20. But the fine print tells a different story—and the document’s own embargo mismatch (it cites 8:30 a.m. ET on Wednesday, December 24) only underscores the narrative slippage. Unadjusted initial claims actually rose to 264,009 (up 8,832), continuing claims ticked higher, and the insured unemployment rate climbed to 1.3% from 1.2%. The “claims down” story hinges on seasonal factors doing heavy lifting, not on a broad-based improvement.

Here’s what the data reveals:

• Seasonally adjusted initial claims fell to 214,000, but unadjusted claims rose to 264,009 (+8,832). Seasonal models anticipated a larger unadjusted rise of +20,817; the smaller-than-expected increase manufactured the headline drop.

• Continuing claims increased: seasonally adjusted insured unemployment rose 38,000 to 1,923,000 (week ending December 13), lifting the insured unemployment rate to 1.3%. Unadjusted insured unemployment jumped 123,957 (+6.6%) versus a seasonal expectation of +84,834 (+4.5%).

• Revisions amplify the rise: the prior week’s insured unemployment was revised down 12,000 (to 1,885,000), and the 4-week average was trimmed 3,000—making this week’s increase look larger against a lower base.

• The 4‑week average of initial claims edged down by just 750 to 216,750, propped up by the 192,000 holiday print from November 29 that still sits in the window.

• State-level tension: some states saw falling initial claims but rising insured unemployment, implying longer durations and slower outflows—especially in Illinois (+25,378 insured unemployment), New York (+5,729), and Minnesota (+7,890).

Numbers Behind the Narrative

The headline improvement relies on seasonal mechanics. The unadjusted reality looks softer, and continuing claims are doing the heavy lifting for that story.

Year-on-year, unadjusted initial claims look better (264,009 vs 275,557 in 2024), but unadjusted insured unemployment is higher (1,994,074 vs 1,945,890), with the same unadjusted insured rate (1.3%). Translation: fewer people are entering the system than a year ago, but those in it may be staying longer.

Seasonal Adjustment Sleight of Hand

The headline “claims down” rests on a modeling nuance. Seasonal factors anticipated a large raw increase around the holidays; when the increase came in smaller, the adjusted figure declined. That doesn’t mean fewer people filed—it means filings didn’t rise as much as the model expected. The +8,832 unadjusted rise versus a +20,817 expectation effectively engineered the -10,000 seasonally adjusted drop.

This matters because December is always noisy. The 4-week average at 216,750 fell by only 750, and it is still depressed by the November 29 low (192,000), a holiday-distorted week. When that falls out of the average, headline stability could evaporate unless claims meaningfully decline again.

Continuing Claims: The Dog That Barked

While initial claims grabbed the headline, continuing claims told the story. Seasonally adjusted insured unemployment climbed to 1,923,000 (up 38,000), and the insured unemployment rate rose to 1.3%. Unadjusted insured unemployment surged 123,957 versus a +84,834 seasonal expectation—an overshoot of +39,123. That’s not a rounding error; it signals slower exits from unemployment insurance.

This is consistent with the broader backdrop. Since late spring, continuing claims have hovered around the 1.9 million plateau. The brief dip to 1,830,000 on November 29 looks increasingly like holiday noise, not a trend change. The December 29 release also revised the prior week’s insured unemployment down 12,000, which mechanically makes this week’s rise look steeper. Revisions aren’t just housekeeping—they reshape the narrative after the headlines.

Four-Week Average: Holidays Doing the Heavy Lifting

December’s pattern shows seasonally adjusted initial claims easing from 237,000 (Dec 6) to 224,000 (Dec 13) to 214,000 (Dec 20). Convenient, but the 4-week average at 216,750 is still being held down by the 192,000 print from November 29. Once that rolls out in early January, the average may drift higher unless fresh claims fall further. The “steady improvement” framing leans on calendar quirks more than labor-market momentum.

All-programs context adds texture: total continued weeks claimed across all programs fell by 88,170 for the week ending December 6, but that was immediately followed by the sharp weekly increases in insured unemployment reported for the week ending December 13. The down-and-up sequence reinforces the idea that November’s lows were seasonal air pockets.

State-Level Frictions: Fewer Entrants, Longer Stays

The state detail undercuts any notion of uniformly “steady strength.”

• For the week ending December 13, initial claims fell notably in Illinois (-7,242), New York (-5,720), Pennsylvania (-5,129), Minnesota (-4,361), and Georgia (-4,325). Yet insured unemployment rose in several of these same states: Illinois (+25,378), New York (+5,729), Minnesota (+7,890). That’s a classic duration story—fewer new filings, but slower outflows.

• The advance unadjusted week ending December 20 shows rising initial claims in a wide set of states: New Jersey (+3,233), Oregon (+1,864), Washington (+1,594), Missouri (+1,458), Massachusetts (+1,409), Connecticut (+1,392), Pennsylvania (+1,137), and California (+664).

• On the continuing-claims side (week ending December 13), increases were broad and heavy: California (+28,691), Illinois (+25,378), Texas (+11,887), Michigan (+11,448), Washington (+8,424), New York (+5,729), among others.

This is not a recession signal, but it is a clean sign of friction: hiring absorption may be slowing relative to separations, extending time on benefits.

History Doesn’t Rhyme—It Revises

The prior December release (embargoed December 11) spotlighted a jump in initial claims to 236,000 for the week ending December 6 (from a revised 192,000 on November 29). Today’s release shifts focus to a decline to 214,000, even as continuing claims trend higher. Add in the date/embargo mismatch and routine back revisions, and the headline narrative looks wobbly. The underlying picture is clearer: initial claims are range-bound with holiday noise; continuing claims are gently grinding higher.

What This Means for Markets

• Rates: Rising continuing claims and a higher insured rate (1.3%) tilt the balance toward slightly softer labor demand, a mild disinflationary cue at the margin. Front-end yields have room to shade lower on data weakness; expect greater sensitivity around the first January claims once the holiday distortion clears.

• Equities: Cyclicals tied to hiring velocity (staffing, small-cap consumer discretionary) face headline risk if the four-week average lifts as the 192,000 outlier rolls off. Quality defensives and cash-generative large caps should hold a relative bid if durations continue to lengthen.

• Credit: Longer benefit spells can pressure lower-income consumption and stretch delinquencies in subprime consumer credit. Favor up-in-quality in consumer ABS; watch early-stage roll rates after mid‑January.

• Macro trades: The divergence between initial claims headlines and continuing claims realities argues for fading knee-jerk “labor re-acceleration” narratives. If continuing claims hold near or above 1.9 million, the bar for a hawkish shift in policy rhetoric stays high.

What to watch next:
- The first two January claims prints as the Nov 29 distortion exits the average.
- State continuing-claims trends in California, Illinois, Texas, and Michigan—currently the heaviest movers.
- Any further administrative anomalies (embargo timing, revisions) that could temporarily brighten headlines without improving fundamentals.

The headline cheered a 214,000 print. The market-relevant signal was a higher insured unemployment rate, rising continuing claims, and durations that look stickier than last year. Position for a labor market that’s cooling at the margins—not collapsing, but not as resilient as the headline implies.