The U.S. job market has become one of the biggest uncertainties in the current economy.
With the government shutdown entering its second month—now the longest in U.S. history—investors and policymakers are navigating blindly without critical employment reports, JOLTS data, or clear insights into hiring, wages, or labor participation.
This week’s private-sector data and surveys have partially filled the void, painting a picture of a job market still functioning but losing momentum as layoffs rise and confidence wanes.
"Hiring has slowed significantly," said Betsey Stevenson, a University of Michigan professor and former economic advisor to President Barack Obama, in an interview Friday.
"If you have a job right now, you’re lucky. But if you lose it, the challenges you face are much tougher than a year or two ago," she warned.
Her concerns align with the latest private-sector figures.
Payroll processor ADP reported that U.S. private employers added just 42,000 jobs in October—the first monthly gain since July but far below levels seen earlier this year. Hiring was strongest in trade, transportation, and utilities, while professional services and information sectors—key drivers of white-collar job growth—saw declines.
"ADP’s data showed job gains last month, but not in AI-related industries—a surprise given investor bets on AI as a major growth driver," said Fundstrat economist Hardik Singh in a Thursday note.
Singh noted a more concerning trend: While corporate profits benefit from AI-driven productivity gains, workers aren’t sharing the rewards. "When you fear losing your job, stock market highs don’t excite you."
Layoff data reinforces this view, signaling underlying cooling in the labor market.
**"A Troubling Economic Reality"**
Outplacement firm Challenger, Gray & Christmas reported over 153,000 job cuts announced in October—the highest for the month since 2003. Cost-cutting, AI adoption, and pandemic-era overhiring were cited as key reasons.
Year-to-date, U.S. companies have announced over 1.1 million layoffs, up 44% from 2024. Tech and retail sectors were hardest hit, with
Taken together, these reports suggest a stable but weakening job market—workers cling to their roles, employers hire cautiously, and confidence erodes.
The University of Michigan’s latest survey showed consumer sentiment plunging to 50.3 in November, the lowest since 2022, driven by shutdown fears and inflation.
Stock-holding respondents reported higher confidence, highlighting the "K-shaped" recovery where market gains disproportionately benefit wealthier households.
"Rising prices and a slowing job market create an uneasy economic reality," Stevenson said. "No one wants an economy where elites thrive while others struggle to maintain their living standards."
This unease extends to policymakers, who now must assess labor health without reliable data.
"The Fed lacks solid data but senses weakening," said PNC Asset Management’s Yung-Yu Ma. He called private data "mixed" and noted the difficulty of policymaking without quality inputs.
Still, Ma expects the Fed may interpret recent trends as evidence of labor market softening, keeping future rate cuts on the table once shutdowns end and data resumes.
Markets agree. CME’s FedWatch Tool shows traders pricing in a ~70% chance of a December rate cut as of Friday afternoon.