A complex state of the labor market, but, as usual, you have insightfully and logically presented how the dynamics are playing out. This is a great reference to have on hand as the economy navigates stormy waters.
I’m not hiring because 1) more people aren’t calling us for services or spending more per person (there’s no sustained velocity much less acceleration in the demand signal), 2) perhaps 1% of the candidate pool matches the position qualifications. I don’t (can’t) add service capacity on “ok” consumer activity. That would be a guaranteed loss. This is super basic and occurring in many industries at different scale, I’m sure.
We have failed to properly educate our students for years. We have been racing to the bottom by fooling our students into a false sense of accomplishment with participation trophies and inflated grades. Now people wonder why businesses aren't hiring them. The signals have deteriorated and the skills have faded.
As a non-economist I continue to find it difficult to impossible to separate the “strange” job creation and other employment data from the fear, uncertainty and instability created by the current administration’s consistently erratic [a kind word to describe what is occurring] economic decision-making. How can anyone, including the most sophisticated economists [thank you Claudia Sahm and Paul Krugman for your valiant efforts to educate me] determine what the future holds when the ground keeps shifting unpredicably under all of our feet.
CS: As always, your presentation and analysis of the data are informative. Your overall conclusion, laid out in the introduction, is disquieting: "We may not be careening toward a recession, but we are failing people entering the workforce, and workers’ wages are not broadly sharing in the faster productivity growth."
We'll know more in a few more reporting cycles: will we continue to fail entry-level workers and will workers' wages continue to stagnate? Neither trend seems desirable, but, because they're relatively unprecedented without other evidence of recession, we can't know now what they portend.
“When we look out two years, three years, five years… we’ll have roughly about the same number of people we have today and we’ll have a larger business,” Walmart U.S. CEO John Furner said.
Amanda Goodall has a good article on why large US employers aren’t hiring anymore.
One has to think the confusion in the usual economic indicators has its origin in two vivid contemporary macroscopic issues impacting the US economy: (1) The chaotic and frequently changing international and national market interventions by the Trump administration without any apparent solid or theoretical economic philosophy as a foundation (except to degrade the Federal Reserve management system for cheap thrills) AND (2) The nation's economy is performing on full tilt with an unprecedented level of wealth inequality with an unusually small number of elite actors and their corporations having an outsized impact on economic activity in many concrete and subtle ways.
I just--March 5--recommended buying shares of Costco to my readers. Why? First, rising gasoline prices send more people to Costco’s cheaper gas--and then they buy other things in the store. Second, because the company is seeing big growth in upper income membership by the wealthy looking to save a buck. I wouldn’t call this an optimistic stock pick.
The jobs revisions are the real signal that the headline numbers completely missed. Adding only 15k jobs a month in 2025 makes the case for rate cuts much more urgent. I just broke this down in my latest brief and would love to have you follow along
1. Why is Inflation falling down in spite of the erratic tariffs and economic uncertainty? Was 'affordability narrative' a myth?
Economic pundits claimed that tariffs will create Covid style supply chain disruptions. Shelves will get empty and prices will skyrocket. Food prices will skyrocket as immigrant farm workers will start getting deported. This never happened.
2. Why job markets continue to hold?
Pundits said that erratic governance style, chaos of immigration policies & deportations, mass firing of regulators and government bureaucrats, rapid deregulation (thousands of EOs), attacks on Fed Independence etc will throw economy into recession.
3. Why AI Capex continue to rise?
Pundits predicted that AI is a bubble and no profit is being generated by these giant data centers which are unsustainable. Krugman made an argument about unsustainable costs of electric power. But large investments in AI continues to go on and on.
I found your discussion confusing because you kept referring to the low “hiring” rate, and it wasn’t clear what this referred to or what data were available on it. You seemed to treat “hiring” as equivalent to “job creation,” but the two are different. When someone retires from a job and another person is hired to replace that person, no new job is created, but someone is hired. And the concept of the “frozen” labor market refers in large part to this phenomenon that people are not leaving jobs, so fewer people are “hired” even though the number of jobs stays the same.
So what do you mean exactly by “hiring,” and how is it different (if at all) from job creation, and what data are available on it?
The massive downward revisions to 2024–2025 job numbers (potentially wiping out ~1 million reported jobs) correlate with sectors most exposed to AI automation.
While mass AI-driven unemployment has not occurred, specific "canary in the coal mine" trends have emerged in late 2025 and early 2026. The data reveals a "white-collar freeze" where companies are using AI to justify reducing entry-level hiring, masking deeper labor market weakness under the guise of technological efficiency.
The most direct link is the collapse in demand for junior knowledge workers. Companies are increasingly replacing entry-level tasks—such as data analysis, basic coding, and copywriting—with AI tools.
A complex state of the labor market, but, as usual, you have insightfully and logically presented how the dynamics are playing out. This is a great reference to have on hand as the economy navigates stormy waters.
I’m not hiring because 1) more people aren’t calling us for services or spending more per person (there’s no sustained velocity much less acceleration in the demand signal), 2) perhaps 1% of the candidate pool matches the position qualifications. I don’t (can’t) add service capacity on “ok” consumer activity. That would be a guaranteed loss. This is super basic and occurring in many industries at different scale, I’m sure.
We have failed to properly educate our students for years. We have been racing to the bottom by fooling our students into a false sense of accomplishment with participation trophies and inflated grades. Now people wonder why businesses aren't hiring them. The signals have deteriorated and the skills have faded.
As a non-economist I continue to find it difficult to impossible to separate the “strange” job creation and other employment data from the fear, uncertainty and instability created by the current administration’s consistently erratic [a kind word to describe what is occurring] economic decision-making. How can anyone, including the most sophisticated economists [thank you Claudia Sahm and Paul Krugman for your valiant efforts to educate me] determine what the future holds when the ground keeps shifting unpredicably under all of our feet.
CS: As always, your presentation and analysis of the data are informative. Your overall conclusion, laid out in the introduction, is disquieting: "We may not be careening toward a recession, but we are failing people entering the workforce, and workers’ wages are not broadly sharing in the faster productivity growth."
We'll know more in a few more reporting cycles: will we continue to fail entry-level workers and will workers' wages continue to stagnate? Neither trend seems desirable, but, because they're relatively unprecedented without other evidence of recession, we can't know now what they portend.
It's all VERY disquieting.
“A leading advisor in the trump White House “ is not reassuring
“When we look out two years, three years, five years… we’ll have roughly about the same number of people we have today and we’ll have a larger business,” Walmart U.S. CEO John Furner said.
Amanda Goodall has a good article on why large US employers aren’t hiring anymore.
I'd argue that if capital spending is up but consumer spending is down, that's a recession from a consumer perspective.
One has to think the confusion in the usual economic indicators has its origin in two vivid contemporary macroscopic issues impacting the US economy: (1) The chaotic and frequently changing international and national market interventions by the Trump administration without any apparent solid or theoretical economic philosophy as a foundation (except to degrade the Federal Reserve management system for cheap thrills) AND (2) The nation's economy is performing on full tilt with an unprecedented level of wealth inequality with an unusually small number of elite actors and their corporations having an outsized impact on economic activity in many concrete and subtle ways.
I just--March 5--recommended buying shares of Costco to my readers. Why? First, rising gasoline prices send more people to Costco’s cheaper gas--and then they buy other things in the store. Second, because the company is seeing big growth in upper income membership by the wealthy looking to save a buck. I wouldn’t call this an optimistic stock pick.
The jobs revisions are the real signal that the headline numbers completely missed. Adding only 15k jobs a month in 2025 makes the case for rate cuts much more urgent. I just broke this down in my latest brief and would love to have you follow along
Some questions.
1. Why is Inflation falling down in spite of the erratic tariffs and economic uncertainty? Was 'affordability narrative' a myth?
Economic pundits claimed that tariffs will create Covid style supply chain disruptions. Shelves will get empty and prices will skyrocket. Food prices will skyrocket as immigrant farm workers will start getting deported. This never happened.
2. Why job markets continue to hold?
Pundits said that erratic governance style, chaos of immigration policies & deportations, mass firing of regulators and government bureaucrats, rapid deregulation (thousands of EOs), attacks on Fed Independence etc will throw economy into recession.
3. Why AI Capex continue to rise?
Pundits predicted that AI is a bubble and no profit is being generated by these giant data centers which are unsustainable. Krugman made an argument about unsustainable costs of electric power. But large investments in AI continues to go on and on.
They go hand in hand. Yet prices have skyrocketed.
Well private sector job growth is huge, so idk what the reference is here
I found your discussion confusing because you kept referring to the low “hiring” rate, and it wasn’t clear what this referred to or what data were available on it. You seemed to treat “hiring” as equivalent to “job creation,” but the two are different. When someone retires from a job and another person is hired to replace that person, no new job is created, but someone is hired. And the concept of the “frozen” labor market refers in large part to this phenomenon that people are not leaving jobs, so fewer people are “hired” even though the number of jobs stays the same.
So what do you mean exactly by “hiring,” and how is it different (if at all) from job creation, and what data are available on it?
Demand management
has sub fields that interact
But
Changes in demand for job hours
Has uncertain suspects a priori
A generalization
Our essentially
mechanical relations models
Are showing disturbing expectational errors
We must look deeper
At the plausible
micro motives
of our rep firm agents
Job adjustments and mark ups
Dials are now ever more unreliable
The massive downward revisions to 2024–2025 job numbers (potentially wiping out ~1 million reported jobs) correlate with sectors most exposed to AI automation.
While mass AI-driven unemployment has not occurred, specific "canary in the coal mine" trends have emerged in late 2025 and early 2026. The data reveals a "white-collar freeze" where companies are using AI to justify reducing entry-level hiring, masking deeper labor market weakness under the guise of technological efficiency.
The most direct link is the collapse in demand for junior knowledge workers. Companies are increasingly replacing entry-level tasks—such as data analysis, basic coding, and copywriting—with AI tools.