The US jobs market is showing signs of strain
Image: The Globe and Mail
All three major US stock indexes fell by at least 1% yesterday as an ongoing tech selloff coincided with a series of new reports that show America’s job market is off to a rough start in 2026.
By the numbers
The evidence was laid out in three separate reports:
- After months of being “little changed,” US job openings fell by 386,000 in December to 6.5 million, suggesting a drop-off in demand for new workers, per the Job Openings and Labor Turnover Survey. Overall, the US economy lost ~1 million job openings in 2025.
- The number of Americans applying for weekly unemployment benefits rose to a two-month high at the end of January, according to new Bureau of Labor Statistics data.
- US employers announced 108,435 layoffs in January—a figure that’s 205% higher than December, 118% more than the year-before period, and the highest figure for any January since 2009, per Challenger, Gray & Christmas.
It isn’t all bad news. The Bank of America Institute's labor market report, based on its customers' deposit data, showed the number of households receiving unemployment benefits fell in January, while jobs growth rebounded.
And the Institute for Supply Management’s survey of manufacturing—long a reliable economic leading indicator—saw a surprising jump in new orders last month, signaling a surge in US production and sales.
A puzzling economic picture
Overall, the US economy is giving more mixed signals than a group chat trying to pick a dinner spot. Economic growth is strong, with US GDP increasing at the fastest pace in two years per the most recent quarterly data.
- But views on the economy have remained negative in recent months, with Americans citing rising costs and a weakening labor market as their top economic concerns.
- Since December, there have been 0.9 open jobs for every unemployed worker—a big turnaround compared to a recent peak of two open jobs per worker in 2022.
Looking ahead…We’ll have a clearer picture of the US labor market next Wednesday, when the Labor Department publishes the shutdown-delayed January jobs report.
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Sprinkles from the Left
- Some commentators argue that the seeming disconnect between perception and reality when it comes to US consumers and the economy is a sign that Americans are really worried about the job market of the near future, and with good reason.
- Others contend that how President Trump handles the current bipolar economy—with huge growth but plummeting consumer confidence—will determine how badly Republicans will perform in the midterm elections this fall.
- “Americans Are Right to Be Worried About the Labor Market” –Justin Fox, Bloomberg
- “A bipolar economy is hard to sell” –Washington Post Editorial Board
- “Wall Street’s Bounty Doesn’t Extend to the Job Market” –Conor Sen, Bloomberg
Sprinkles from the Right
- Some commentators argue that many Americans, especially swing voters, feel things aren’t good with the US economy right now, and argue President Trump and other Republicans should take heed and empathize, underpromise, and overdeliver for voters.
- Others contend that the problems facing Americans are real, with prices of many basic goods remaining high and the job market sluggish—but American voters should wait to measure President Trump’s economic approach until they see the full benefits of recent tax cuts and red-tape cutting.
- “Republicans Have an Economy Problem” –Karl Rove, Wall Street Journal
- “Trump’s economic plans are starting to pay off — so now’s not the time to bail on them” –NY Post Editorial Board
- “Trump’s 2026 economy” –Peter Morici, Washington Times
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