by Brad Houle, CFA
Principal
Head of Fixed Income
Portfolio Management
We’re caught in a strange economic limbo with the U.S. employment market. Large-scale layoffs and a climb in the unemployment rate that signals a recession has not materialized; but the robust hiring that signals a healthy economy has vanished. The result is a labor market completely stuck in neutral, and the official numbers we’ve relied on for decades are looking shakier than ever.
At the center of the confusion is the Bureau of Labor Statistics (BLS), the institution that provides the “official” scorecard for the economy. Confidence in their monthly jobs report, a cornerstone for markets and policymakers, has lost credibility.
Erika McEntarfer, former commissioner of the Bureau of Labor Statistics (BLS), was fired in August 2025 by the current administration. The firing came after the BLS released a report showing weaker-than-expected job numbers for July, along with significant downward revisions to the previous two months’ data. For a while now, economists have worried about a quiet crisis brewing within the data itself. Fewer and fewer people are responding to the government’s surveys. When participation drops, the risk of getting the numbers wrong goes way up.
We saw this firsthand with the recent massive downward revision to payroll data, where hundreds of thousands of reported job gains simply vanished into thin air. It was a stark reminder that the headline number we see on the first Friday of each month might not characterize the health of the labor market.
In a world of questionable surveys, there’s one number that’s becoming more important than ever: weekly jobless claims. Unlike surveys estimating how many jobs were created, jobless claims are a hard count. It’s administrative data, filed directly by people seeking unemployment benefits. It’s real, it’s in real-time, and not subject to the positive selection bias that happens with companies responding to surveys.
What are the claims telling us? Consistently, they show that companies are not firing people. Layoffs remain near historic lows. Businesses seem to be playing defense—holding onto employees they have, likely because they remember how hard it was to hire them in the first place.
While there are not mass layoffs happening, despite some high profile businesses such as-Intel-laying off thousands of people, there is a quiet but powerful slowdown in new job creation.
Businesses are holding steady, but they aren’t expanding. They aren’t adding new positions at anything close to the pace they were a year or two ago. This is what makes the market feel so stagnant. For anyone looking to switch careers, get a promotion, or negotiate a raise, the opportunities are drying up.
The job market is neither strong nor broken. On one hand, the reluctance of companies to lay off workers is providing a solid floor for the economy. On the other, the disappearing momentum in hiring means we’re not going anywhere fast.
Weekly unemployment claims have held in historically low ranges even though new job creation has slowed.