We expect that initial jobless claims will have dropped down to 215k for the week ending February 8, from 219k in the previous week, as weather conditions improve from the recent weeks of frigid weather that swept across many states. While the series could soon face potential risks from recent headlines about the USAID shutdown, all direct hire employees were placed on administrative leave rather than being terminated. The agency employs a large number of contractors globally, many of whom have been furloughed; however, the impact on jobless claims should also be limited because a portion of these employees are likely working outside the country for legal entities not paying US unemployment insurance taxes.

Separately, the government is still collecting deferred resignation offers from many parts if the workforce, which have recently hit 40k. Because employees are voluntarily resigning they will not be eligible for UI.

Overall, the labor market continues to show signs of health, as continuing claims remain within the range observed over the past few months and initial claims remain low. The recent JOLTS report also provided a positive signal, with the layoff rate staying low. Although there was a slight drop in job openings, this remains aligned with the current unemployment rate.