Cracks in the Job Market: A Cautionary Tale from Economists
The latest economic reports paint a picture of a surprisingly stable U.S. job market. However, according to **Andrew Flowers**, chief economist at Appcast, the outlook may not be as rosy as it seems. He warns that there are significant **”cracks in the foundation”** that could create challenges for workers in the near future.
Job Growth: A Closer Look
In May, the U.S. **added 139,000 jobs**, slightly below April’s figure of 147,000, as reported by the Bureau of Labor Statistics. The unemployment rate held steady at **4.2%**, and the underemployment rate remained unchanged at **7.8%**. While these statistics may appear stable, Flowers highlights that the job market is **”treading water”**—the average monthly job addition of **144,000** in the past year is the lowest figure since 2011, aside from the pandemic drop.
Sector-Specific Concerns
Most of the available positions are concentrated in **health care, leisure and hospitality, and social assistance**. These sectors have been robust in generating new jobs, but Flowers cautions that **tariffs** and health-care policies under the previous administration’s **”Big, Beautiful Bill”** could impede their potential growth. This spending bill, currently under Senate consideration, proposes to cut Medicaid spending by a staggering **$700 billion**, complicating access to health plans on the Affordable Care Act marketplaces.
Flowers warns that cuts to health care—responsible for approximately **30% of new jobs** over the past three years—could **”kill the golden goose.”** Once a stalwart in job creation, the health care sector could face dire challenges ahead.
Tariffs and Consumer Spending: A Dangerous Feedback Loop
Similarly, sectors like leisure and hospitality may find themselves at risk as businesses pass the cost of new **tariffs** onto consumers, potentially leading to decreased spending. Flowers states that **tariffs are already “starting to bite”**, resulting in declines in warehousing and retail jobs that previously buoyed job growth in April.
A Shrinking Job Market for Young Seekers
The Job Search Experience
The job-search landscape is becoming increasingly daunting. A staggering **40% of job-seekers** express skepticism about the number of jobs available, and nearly one-third foresee even fewer opportunities in the next six months, as indicated by the latest job-seeker confidence index by ZipRecruiter.
Flowers refers to a **”collision course”**, where young job seekers struggle to land positions they desire, while blue-collar jobs remain hard to fill. He explains, **“We’ve told young people in this country for decades, ‘Go to college.’ And they did.** Now they’re finding that popular fields such as tech, marketing, and banking are among the weakest in terms of job availability.
Young people are going to face a harder time getting the jobs that they wanted.
— Andrew Flowers, Chief Economist at Appcast
A Broader Economic Perspective
Overall, the U.S. economy has contracted over the past six weeks, as per a recent Federal Reserve report. This report noted **elevated levels of economic and policy uncertainty**, contributing to a cautious approach from both businesses and households.
The future remains uncertain. With **flat hiring** in some districts and a growing candidate pool, the situation calls for a strategic reassessment for both employers and job seekers.
Final Thoughts
As we navigate these shifting tides in the job market, it’s crucial for both workers and businesses to stay informed and adaptable. **Understanding the underlying economic signals now can better prepare us for what lies ahead.** In this evolving landscape, resilience and strategic thinking will be key to thriving.
Are you interested in owning a home? Consider taking Smarter by CNBC Make It’s new online course, How to Buy Your First Home. Expert instructors will guide you through the entire process, from mortgage basics to closing the deal.
Also, don’t forget to sign up for the CNBC Make It newsletter for tips on achieving success in the workplace and beyond.
