Unemployment filings hit their highest level since 2021 — what it signals about the US job market (and how to prepare)

The number of Americans filing for unemployment benefits during the first week of September rose to 263,000, according to the Labor Department. (1) That marks the highest level since October 2021 — and nearly 30,000 higher than economists predicted — signaling growing pressure in the labor market.

Unemployment benefits are temporary payments provided to eligible workers who lose their jobs through no fault of their own. While the program has federal oversight, benefits are administered at the state level, and the amount and duration can vary significantly depending on where you live.

Weekly unemployment applications numbers are considered an economic indicator. Rising numbers of applications can signal a softening job market. So is it time to plan for the worst? Here’s what you need to know about budgeting for economic uncertainty.

While the U.S. economy is not in a recession, the steady rise in unemployment may make some feel less certain about job security in the months ahead. For many workers, that uncertainty can trigger financial anxiety — but it can also be a prompt to take control and prepare now, while they still have a stable income. If you’re employed and concerned about job security, here’s what the unemployment numbers mean, and what you can do to safeguard your finances.

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What unemployment numbers mean for the state of the economy

The average number of claims in August also rose to 240,500, a clear uptick from earlier this year, when claims hovered closer to the 210,000 range. The total number of Americans already collecting unemployment benefits remains steady at about 1.94 million.

Economists point to several factors behind the increase: slowing consumer spending, higher borrowing costs due to elevated interest rates and companies tightening payrolls in response to economic uncertainty. While the labor market remains far stronger than during the pandemic, the rise in jobless claims suggests that finding or keeping a job is becoming more difficult. (3)

For job seekers, that may mean more competition for open roles and longer stretches between positions. For those currently employed, it highlights the importance of preparing for unexpected changes — especially as rising prices and inflation continue to eat away at American’s paychecks.

It’s worth noting that the U.S. unemployment rate remains fairly low compared to past recessions, and consumer spending, though slowing, hasn’t collapsed. (4) That suggests the economy is softening, not spiraling. (5)

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How to safeguard your finances during times of economic uncertainty

Whether you’re feeling secure in your job or starting to worry about potential layoffs, the best time to prepare for income disruption is before it happens. These financial strategies can help you maintain stability and peace of mind if the job market continues to weaken.

Build your cash reserves

If you are still working, now is the time to increase your savings if you can. Aim to have at least three to six months of essential expenses saved in a high-yield savings account. Even a small emergency fund can make a big difference if your income suddenly stops.

Double check your budget

If you haven’t paid as much attention to your budget lately, now is the time to review your spending and savings targets. Look for areas to trim, like subscriptions you rarely use or discretionary spending that can be paused. Focus on needs versus wants and redirect any extra funds towards savings.

Boost your at-home reserves

If you can, build up a small stock of household staples, toiletries and cleaning supplies and pantry items. It won’t replace an income, but having essential household needs on hand can ease the pressure on your budget if prices spike or money gets tight. Just remember to only buy what you’ll actually use and stay mindful of expiration dates.

Pay down high-interest debt

If you are carrying balances on credit cards or other high-interest loans, prioritize paying them down while you still have income. Reducing or eliminating these payments can significantly lower your monthly expenses and give you more breathing room if your income drops unexpectedly.

Avoid major new financial commitments

If you’re worried about job stability, hold off on large purchases, new loans or major lifestyle upgrades. Preserving flexibility now can prevent financial strain later.

If you do lose your job, the first step is to apply for unemployment benefits through your state’s labor office. Applications typically require recent pay stubs, proof of separation and active efforts to find a new job. Beyond unemployment insurance, some workers may also qualify for COBRA health coverage, severance pay or job retraining programs.

The rising number of unemployment claims doesn’t mean a crisis is inevitable, but it is a sign that the labor market is shifting. Even if you feel secure in your job today, preparing now can help you stay in control if conditions worsen. By building savings, paying down debt and protecting essential expenses, you can reduce financial stress and face uncertainty with confidence rather than fear. In times like these, preparation isn’t about assuming the worst — it’s about empowering yourself to handle whatever comes next.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

AP (1), (2); CNBC (3); BLS (4); BEA (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.