The Fed's Powell is worried about the job market. Here are 3 red flags.

Powell signals imaginable involvement complaint cuts

Powell signals imaginable involvement complaint cuts path 03:45

When Federal Reserve Chair Jerome Powell connected Friday opened the doorway to cutting involvement rates for the archetypal clip successful astir a year, helium noted the tremors opening to shingle a main pillar of the U.S. economy: the labour market. 

Concerns astir the gait of occupation maturation were heightened earlier this period aft authorities information showed a crisp slowdown successful hiring successful July, on with overmuch weaker payroll gains successful May and June than antecedently thought. The disappointing numbers were alarming capable for President Trump to question their accuracy and to fire the caput of the agency tasked with compiling the data.

Yet labour experts archer CBS News they weren't amazed by the downturn, and caution that much symptom could beryllium successful store for occupation seekers. Data released since the August 1 occupation numbers shows companies are delaying hiring arsenic they set people to relationship for headwinds including fresh U.S. tariffs and the advent of artificial intelligence, they say. 

"There's a existent cooling successful the labour market," Andy Challenger, elder vice president of enforcement outplacement steadfast Challenger, Gray & Christmas, told CBS MoneyWatch. "We're besides having tons of idiosyncratic conversations with companies that are letting america cognize to expect aboriginal layoffs."

He added, "So for me, determination is much crushed to beryllium pessimistic astir the labour marketplace than optimistic we'll spot immoderate large bounce back."

Here are 3 charts that could constituent to a superior downturn successful the U.S. occupation market.

Fewer workers are getting hired

Overall, U.S. employers successful 2025 person added less jobs connected a monthly ground compared with the gait of gains successful caller years, erstwhile companies sought to grow arsenic the economy roared back from the pandemic. In 2024, employers hired an mean of 168,000 workers each month, but that has slowed to an mean of 35,000 implicit the past 3 months, Powell said connected Friday. 

The hazard is that the labour marketplace could weaken from here, which could pb to "sharply higher layoffs and rising unemployment," Powell said. 

The slowdown could spur the Fed to chopped its benchmark involvement rate, policymakers' main instrumentality for energizing the system and occupation growth, astatine its gathering adjacent period for the archetypal clip since December 2024. Lowering rates could bolster the labour marketplace due to the fact that it would marque it cheaper for consumers to borrow, driving spending, for businesses to invest, including by adding workers. 

More semipermanent occupation seekers

Another troubling motion is simply a caller surge successful semipermanent occupation seekers, oregon radical who person been searching for a occupation for much than 27 weeks. In July, astir 1.8 cardinal Americans had been looking for enactment for much than 27 weeks, a leap of astir 64% from 3 years earlier and 20% from a twelvemonth ago. 

It whitethorn not get easier to find enactment anytime soon, fixed signs from employers that they mean to proceed to chopped jobs, Challenger said.

"Don't instrumentality the summertime off" from looking for caller work, helium advised job-hunters. "It's hard to ideate a script wherever the labour marketplace volition beryllium amended successful 3 to six months."

A leap successful unemployed young workers

At the aforesaid time, young workers are besides having much occupation uncovering their archetypal jobs, which has been blamed connected everything from slowing economical activity this twelvemonth to employers adopting artificial quality successful place of entry-level workers. 

To beryllium sure, the nation's unemployment complaint remains low, astatine 4.2%. Yet that statistic is backward-looking, reflecting the labour market's spot successful erstwhile months — it says small astir economical conditions moving forward. 

Meanwhile, caller assemblage graduates the existent occupation marketplace amounts to "a cleanable storm," said vocation manager Tracey Newell.

"Companies are limiting caller entry-level roles, and AI is replacing galore accepted 'starter' jobs," she added, noting that it isn't antithetic for employers these days to person hundreds of occupation applications for a azygous position. 

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