"A leading investment bank has delivered an arresting diagnosis of the U.S. economy: the labor market, long a pillar of resilience, may be in real trouble. In their latest economic outlook, UBS economists led by Jonathan Pingle painted a picture of mounting weakness that extends well beyond headline job numbers, warning of a growing risk to households and the broader recovery."
"The latest "US Economics Weekly" note from the Swiss investment bank came with bated breath ahead of the impending end of the federal government shutdown. Economists and market-watchers have been deprived of federal economic data for over 40 days, something that former Bureau of Labor Statistics commissioner Erica Groshen likened to "flying blind" in late October. If the government does reopen, Pingle's team said it expects jobs data for September to be released next week."
"For much of the year, top economists, including Fed Chair Jerome Powell, have said we're in a "low hire, low fire" jobs market. For much of the year, employers were laconic in hiring, and seemed afraid to fire their workers; perhaps still wounded from the pandemic-era "Great Resignation." UBS isn't alone on Wall Street in worrying that, maybe the "low-fire" part of the equation isn't quite true anymore."
Federal government data outages caused by a prolonged shutdown have left a multiday gap in jobs and inflation reporting, delaying critical economic indicators. Labor-market metrics that once reflected a "low hire, low fire" pattern now show signs of broader deterioration, with hiring subdued and firings rising. Large, established companies are announcing significant staff reductions while many laid-off workers are not being rehired. The weakening extends beyond headline employment counts and raises the probability of mounting stress on household finances and a drag on the broader economic recovery if the trend continues.
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