#labor market

#labor market

It's not that Americans or the data are wrong - consumers do have legitimate concerns. It's that some of the financial pressures people are feeling, like increased financing costs for auto loans or closing costs on home mortgages, don't necessarily show up in the major datasets like the Consumer Price Index,

As expected, inflation ticked slightly higher during August with rising housing, food and energy costs leading the way. Core inflation however remained stable, ensuring a rate cut in September is now a forgone conclusion. The Federal reserve having been in wait and see mode since December 2024 has been given the green light today to cut rates. Inflation has not seen large upside surprises from tariff turmoil and with recent revisions to jobs data showing almost 1 million fewer jobs than previously thought,

Most economists believe the Fed will cut rates at its meeting next week after recent data revealed a labor market that's been softening for longer than previously thought. While inflation also remains stubbornly above the U.S. central banks 2% target and is forecast to have risen again in August, Fed officials have increasingly expressed concern about a slowing U.S. job market.

New labor data showing shrinking job opportunities and increased unemployment has perhaps stoked the fears of wealthier Americans more than their lower-income compatriots. The New York Federal Reserve's August 2025Survey of Consumer Expectations found Americans earning more than $100,000 more often believe unemployment will rise in the next year compared to those earning less. Increased pessimism may be a result of fears that white-collar jobs are being impacted by the rocky economic and political environment.

The dismal August jobs report confirmed the labor market cooled significantly during the spring and summer. That coincided with the start of President Donald Trump's trade war. While some tariff-impacted industries have seen minimal changes in payrolls, others like manufacturing and wholesale trade have taken bigger hits. Since President Donald Trump launched his trade war earlier this year, industries impacted by tariffs have shed tens of thousands of jobs.

The 'manufacturing recession' - underway for years - got uglier. The sector lost 12,000 jobs in August, the fourth consecutive month of shrinking employment. The industry had 78,000 fewer workers last month, relative to the same period a year ago. Construction shed jobs for the third straight month. Wholesale trade - a sector that includes transportation, warehouse staff and material handlers - has lost 32,000 workers since May.

From chronic struggles with burnout to a pragmatic, even skeptical take on how to lead their careers, the generation that entered the workforce during the age of quiet quitting has come to exemplify the quarter-life crisis. But what if this is the new norm, and the midlife crisis is going extinct the way other trappings of the 20th century have, like dial-up internet and Kodak film? What if Gen Z has giant, macroeconomically valid reasons for being plunged into a collective quarter-life crisis?

There's not going to be a swift return to the near-zero interest rate environment of recent years, Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, tells Axios. The central bank's neutral rate will look more like that of the 1980s and 1990s. The market may need to "recalibrate everything to acknowledge that rates are likely to remain at higher levels," she says. The market is not priced for that right now, she adds.

If this experiment fails, it's gonna fail horribly, and I think we'll begin to see the impacts of that sooner than later,

There's more troubling news for the white-collar job market: wage growth is falling short of inflation. A Bankrate analysis used employment cost index and consumer price index data from the Bureau of Labor Statistics to look at how the gap between wage and salary growth and inflation has changed since 2021. The difference allowed Bankrate to identify the industries with better worker bargaining power. Financial activities and professional and business services fell on the wrong side of that divide. Wage growth falling behind inflation in those sectors adds to the bleak picture of the white-collar labor market.

Instead of replacing workers, organizations are finding real gains from "replacing BPOs [business process outsourcing] and external agencies, not cutting internal staff."