Chicago Fed estimates slight rise in jobless rate
The U.S. unemployment rate likely edged up in October to 4.4%, marking the highest level since October 2021, according to a new estimate from the Federal Reserve Bank of Chicago. The increase from 4.35% in September is attributed to a slowdown in hiring and a rise in layoffs and job separations.
The estimate, released Thursday, puts the unrounded rate at 4.36%, slightly higher than the latest official Bureau of Labor Statistics (BLS) figure, which stood at 4.3% in August. That BLS reading was the highest since the 4.5% rate recorded in late 2021.
Impact of government shutdown on data
This October reading coincided with a federal government shutdown that began in early October and may have disrupted standard labor market reporting. The Chicago Fed has been publishing its own labor estimates twice a month since a prolonged 2018–2019 shutdown disrupted access to BLS, Census, and BEA data.
According to the Chicago Fed, the unemployment reference week for October (October 12–18) overlapped with the government shutdown. As many as 750,000 federal employees were furloughed during that period, representing up to 0.4% of the civilian labor force based on August 2025 data.
Weaker labor market conditions emerge
The estimated uptick in unemployment reflects broader signals of a softening labor market. Slower hiring rates among the unemployed and an increase in job separations suggest growing uncertainty among employers.
While the full impact of the government shutdown may not be entirely captured in the current estimate, analysts expect that future labor data will provide a clearer picture. The Chicago Fed noted that its labor indicators are only partially incorporating the effects of the shutdown in their October final release.
