Dive Brief:

• The number of workers who filed for unemployment benefits last week fell to the lowest level since mid-January, the Labor Department said Thursday, as employers limited layoffs amid signs of solid economic growth.
• Jobless claims declined in the week through March 14 to 205,000, or 8,000 less than the prior week, the Labor Department said. Continuing claims, or the total number of unemployed workers, rose to 1.86 million in the week ended March 7 from 1.85 million the week before.
• Federal Reserve Chair Jerome Powell on Wednesday called the 4.4% unemployment rate in February “stable,” noting that it is well below the historical average and that “both supply and demand for workers have come down very, very sharply over the course of the past year due to immigration policy.”

Dive Insight:

Fed officials, in a median estimate released Wednesday, forecast that unemployment will hold steady at 4.4% throughout this year before edging down to 4.3% next year and to 4.2% in 2027.

The job market has held steady so far this year even as several high-profile companies such as Amazon, Meta, UPS and Oracle Corp announced layoffs.

“You’ve got a sort of zero-employment-growth equilibrium,” Powell said, noting that both hiring and layoffs are unusually low.

“It does have a feel of downside risk, and it’s not a really comfortable balance,” he said, noting that demand for workers has eased while limits on immigration and lower labor force participation have reduced growth in the workforce.

“A good number of people on the [policy-setting Federal Open Market] Committee are concerned about a very, very low level of job creation,” Powell said. “It’s something we’re watching carefully and we’re concerned about.”

Undergirding the job market is an economy that is “expanding at a solid pace,” Powell said, noting “resilient” consumer spending and rising business fixed investment.

Gross domestic product will likely grow 2.4% this year and 2.3% in 2027, according to the median estimate by Fed officials. In December they forecast 2.3% economic growth this year.

During the first quarter of this year, the economy will probably grow at a 2.3% annual rate, the Atlanta Fed predicted on Thursday.

The Fed on Wednesday — in a decision with one dissent — held the main interest rate steady while flagging the uncertain economic impact from the Iran war.

Central bank officials in a median projection forecast one quarter-point reduction in the federal funds rate this year, unchanged from their estimate in December.

Fed officials expect that their preferred measure of inflation — the personal consumption expenditures price index minus volatile food and energy prices — will end 2026 at 2.7%, 0.2 percentage point higher than their December estimate.

Powell on Wednesday said that the risk of higher inflation does not exceed the risk of higher unemployment.

Congress mandated the Fed to ensure price stability and maximum employment.