Economists Say U.S. Labor Market Has Entered a Jobs Recession
Warnings are mounting that the American labor market has already tipped into a downturn, with prominent economists pointing to weak payroll gains, questionable adjustments, and rising joblessness as evidence of a deepening slowdown.
Official figures show the economy added just 22,000 positions in August — far below forecasts — while unemployment ticked up to 4.3%, the highest since 2021. June even registered outright job losses. Yet some analysts argue the true state of the market looks even worse once statistical adjustments are stripped away.
David Rosenberg of Rosenberg Research says the Bureau of Labor Statistics’ Birth-Death model — which estimates jobs from new businesses — created the illusion of growth. Removing its 96,000-job addition turns August’s modest gain into a 74,000 decline, extending a four-month streak of shrinking payrolls. He compared the trend to the sluggish years following the 2008 financial crisis.
Sector-by-Sector Weakness
Mark Zandi of Moody’s Analytics described the broader labor picture as already “in recession territory.” While healthcare and hospitality continue to expand, other major employers such as construction, manufacturing, mining, and government have slipped into contraction. Zandi, who has long argued that many U.S. states were facing localized recessions, says national data now reflects the same pattern.
“Hidden” Job Losses
Peter Schiff of Euro Pacific Asset Management offered perhaps the darkest assessment. He contends that official unemployment figures significantly understate the severity of the downturn. Alternative measures, he said, show joblessness closer to 8% or even above 10%. Schiff likened today’s labor market to the fallout from the Great Recession and the 2020 pandemic lockdowns, warning that revisions consistently reveal a steady erosion of job creation.
With payroll gains vanishing and unemployment climbing, debate is shifting to how policymakers will respond. For now, the labor market that once underpinned America’s post-pandemic recovery is showing unmistakable cracks — and some analysts believe the jobs recession has already begun.
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