Hiring is way down. Hiring is at its lowest since early 2011, aside from the worst moment of the pandemic. This low a hiring rate is typically seen when unemployment is around 8%, though unemployment today is only 4.6%. What's going on?

It's not Trump policies, and it's not AI. Hiring has been very low since 2024, and has flattened out. If it were AI, the hiring slowdown would have accelerated in 2025, rather than plunging earlier. If it were Trump policy, the slowdown would have started in 2025.

The pandemic broke the relationship between hires and unemployment. Pre-pandemic, low hiring = high unemployment. No longer. In pandemic recovery, there was lots of hiring, followed by a steep drop as some firms overhired. We are still feeling the effects of the pandemic.

Low hiring hurts young people most since many are newly entering the labor market. Their employment rates have fallen in the past year, while employment for other age groups has held steadier or even increased.

The hiring rate is the most alarming labor market signal today. Low payroll growth is also a red flag but largely due to immigration policies slowing workforce growth. Other measures, like U3, EPOP, and real earnings, are still solid or strong, with weakening. More on Friday!