The U.S. job market hasn’t collapsed, but is no longer overheating, snapping back, or even cooling in a conventional sense. It’s simply stuck.
Economists say that kind of stall is more dangerous than it looks.
“There’s just no forward motion,” Moody’s Analytics chief economist Mark Zandi told Fortune. Job gains bounce slightly from month to month, but net hiring has gone essentially nowhere this year, he said, leaving the labor market “stuck in the mud.”
That stagnation explains why unemployment has continued to rise despite weak labor-force growth. Typically, joblessness climbs when layoffs surge or hiring freezes abruptly. This time, with neither happening, the economy has instead been failing a weaker benchmark, unable to create enough jobs just to absorb even modest population growth.
The unemployment rate has risen by roughly six-tenths of a percentage point since the start of the year, a move that Zandi said carries weight, even if it unfolds gradually.
“You wouldn’t see unemployment rising if labor demand were okay,” Zandi said. “This tells us demand is weak too.”
One of the clearest signs of that strain appeared beneath the headline payroll numbers. The number of people working part time for economic reasons jumped by nearly 1 million in November, rising to 5.5 million, as more workers reported having their hours cut or being unable to find full-time jobs.
Businesses are “doing everything they can to avoid laying off workers,” Zandi said, noting that trimming hours and leaning more heavily on part-time or temporary labor is often the first step when demand begins to soften. He cautioned that the size of the increase was likely overstated by data noise related to the recent government shutdown, which disrupted survey collection. Even so, the direction of the decline is consistent with a broader cooling in labor demand.
Private-sector hiring, meanwhile, remains positive but weak. November’s gains offered little reassurance, and upcoming revisions could further soften the picture. Once those adjustments are made, Zandi expects overall job creation to look even closer to flat.
“It’s not hemorrhaging,” he said. “But it’s not creating jobs, either. It’s basically going sideways.”
That kind of stall can be as risky as an outright downturn. Rising unemployment tends to weigh on confidence, and over time that pressure can bleed into consumer spending.
“The risks of the economy going into recession are uncomfortably high,” Zandi said.
“We’re on the edge,” Zandi said. “We haven’t gone over yet. If that boost from AI wanes, then we’ve got a problem.”
“The modest job growth alongside robust GDP growth seen recently is likely to be normal to some degree in the years ahead,” Goldman’s economists also warned in October, speculating that many currently occupied jobs don’t actually need to be filled with human workers and the real toll won’t become apparent until companies get the cover provided by a recession to reduce force en masse. “History also suggests that the full consequences of AI for the labor market might not become apparent until a recession hits.”
