The number of Americans filing for unemployment benefits rose again last week as the war in Iran drove up fuel prices, adding new strain to an already sluggish US economy.
The Labor Department said new jobless claims rose to 215,000 in the week ending May 23, up from 210,000 the previous week. Layoffs remain low by historical standards, but the latest increase comes as businesses and households face rapidly rising energy bills, weak hiring momentum, and an even more uncertain outlook than earlier this year.
The labor market did not crack. But it no longer provides the same sense of stability that carried the economy through much of the post-pandemic recovery.
Many employers are still avoiding major layoffs, however they are also becoming more reluctant to increase payrolls. Last year, the United States added fewer than 10,000 jobs per month on average outside of recessionary periods, marking one of the weakest hiring trends in decades. Hiring improved slightly in 2026, but remains below the explosion seen after the close of the COVID season.
The impact has now spread beyond the labor market.
The Iran war has disrupted the global oil market after Iran moved to close the Strait of Hormuz following US and Israeli strikes. The route carries about a fifth of the world’s oil supply, and the disruption has caused a sharp rise in gasoline prices across the United States.
According to AAA data cited in the report, gasoline prices rose to $4.43 per liter from $2.98 before the conflict began. That kind of expansion goes fast in everyday life. Shipping is expensive. Airlines and transportation companies are facing rising fuel costs. Retailers and manufacturers are forced to absorb higher distribution costs or pass them on to customers.
Families are also beginning to feel their income disappear into gas, groceries, and monthly bills, leaving little room for travel, entertainment, and discretionary spending as we head into the summer months.
Another warning sign is starting to appear below. The number of Americans collecting unemployment benefits rose to 1.79 million, suggesting that workers who lost their jobs may take longer to find new positions in the slow and heavily guarded hiring market.
Economists noted that weekly claims remained low compared to previous declines. Carl Weinberg, chief economist at High Frequency Economics, described the recent increase as small relative to the size of the US workforce.
But the economy now looks less immune to external shocks than it did earlier this year.
Airlines, shipping firms, manufacturers, retailers, and other sectors that depend on fuel are all facing higher operating costs at a time when consumer spending is already becoming more uneven. Investors are also increasingly worried about how long energy prices can last if tensions in the Middle East continue to escalate.
The unemployment rate remains relatively low at 4.3%, helped in part by slower labor force growth immigration restrictions and the ongoing Baby Boomer retirement. However, the economic landscape has changed as businesses and consumers adjust to the reality of high fuel costs filtering deeply into everyday life.
In businesses and homes alike, summer begins high fuel billsweak hiring momentum, and growing uncertainty about how much costs might rise.
