Leading economists and experts are flagging signs of a slowing U.S. labor market after a disappointing November nonfarm payrolls report released Tuesday.
According to the report, nonfarm payrolls increased 64,000 during the month, which was ahead of expectations at 50,000, but is still significantly below the levels associated with a healthy pace of job creation, according to the Bureau of Labor Statistics.
Employment Growth Has Flatlined Since ‘Liberation Day’
University of Michigan economist Justin Wolfers said in a post on X that, after accounting for October job losses and downward revisions to August and September, there has been “virtually no employment growth” since April, which coincides with President Donald Trump’s “Liberation Day” tariffs.
Wolfers added that official payroll figures may still be overstating the true pace of hiring. He cited Federal Reserve estimates suggesting the data overstate job growth by roughly 60,000 jobs per month due to technical issues in the birth-death model, concluding that “employment is shrinking around 40k per month.”
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According to Wolfers, part of this weakness reflects job losses tied to federal workforce reductions as part of the government DOGE initiative.
He said that the workers who took a “fork in the road” exit from government employment reduced payrolls by 157,000 jobs in October and another 5,000 in November.
However, he cautioned that the public sector is not the sole driver of the slowdown, adding that “private-sector hiring remains weak and may have stalled totally.”
Wolfers pointed to the Sahm Rule, which flags recessions when the three-month average unemployment rate rises at least half a percentage point above its prior low. He noted that the unemployment rate was 4.0% in January, while the latest average stands at 4.5%.
He said it remains unclear whether the economy is already in a recession, but said that the underlying employment trend clearly hints at a slowdown.
Federal Reserve In A Tough Spot
Investor Kevin O’Leary said that the November jobs report strengthens the case for an interest-rate cut, while also underscoring the difficult position facing the Federal Reserve as it weighs slowing labor-market momentum against still-elevated inflation, during his appearance on CNN on Tuesday.
The Shark Tank investor said the latest employment data “supports a 25 basis point rate cut,” but added that the report was “soft and slightly inaccurate” due to the impact of a 43-day government shutdown.
At the same time, O’Leary noted that inflation remains above the Fed’s target, saying inflation is still running at 3.1%. That combination, he said, puts policymakers in a “very difficult position,” as any move to ease monetary policy risks reigniting price pressures.
Looking at the data “purely through the lens of an investor,” he said, management teams at the companies he invests in, spanning all 11 S&P 500 sectors and largely employing between 5 and 500 workers, are growing more worried about input costs.
US Economy In A ‘Hiring Recession’
California Gov. Gavin Newsom (D) slammed Trump for the deteriorating job market, saying, “Great work, @realDonaldTrump,” in a post on X, while sharing a post by Heather Long, the Chief Economist at the Navy Federal Credit Union.
In her post, Long highlighted that 710,000 more people were unemployed in November, compared to the same period the prior year, adding that the “US economy is in a hiring recession.”
She concluded by saying that this was the outcome of the “combination of tariff impacts, AI, and cost-cutting,” which was now hurting Americans.
Photo: Hryshchyshen Serhii/Shutterstock
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