Investors may be “having a cake and eating it” in 2026, with Wall Street strategists predicting stock market gains driven by Fed rate cuts, tax incentives, and lower-than-expected inflation.
As Wall Street prepares for this week’s highly anticipated monthly Consumer Price Index report, which is expected to stay unchanged from the prior month at an annual increase of 2.7%, strategists are pointing to cheap oil prices and easing shelter costs as a sign that prices may be cooling.
“Our view is that inflation will surprise to the downside in 2026,” Longview Economics global economist and chief market strategist Chris Watling told Yahoo Finance last week.
It’s not all good news on the economic front. Last month’s employment report, released on Friday, showed the economy added fewer jobs than expected to cap a weak 2025.
But a cooling labor market gives the Federal Reserve reason to cut rates this year, which could push bond yields lower. That’s especially true if President Trump’s pick to replace Fed Chair Jerome Powell when his term ends in May shifts the central bank in a more dovish direction.
Lower yields mean cheaper borrowing costs, which can boost economic activity and keep corporate capital expenditures high.
“You could really get an economy pretty juiced as we go through this year, because you can have the capex, and you can have the sort of consumption starting to improve as housing fixes up and bond yields move lower,” Watling added. “This is what I call having a cake and eating it.”
Wall Street is already spotting “green shoots” as companies take advantage of the depreciation tax benefits from Trump’s One Big Beautiful Bill (OBBB) Act, signed into law in July.
“If you are a CFO of a company, and the OBBB allows you to get 100% depreciation for capex in one year … you will absolutely accelerate as much of your multi-year capex spend into 2026 as possible, or risk getting fired for missing those tax benefits,” Nomura Securities equity derivatives analyst Charlie McElligott wrote in a note last week.
Economic growth happens even as affordability challenges maintain a K-shaped divide, with the bottom half of consumers struggling to cover basic needs. In a nod to affordability ahead of the midterms, Trump recently criticized firms like Blackstone for buying single-family homes as investments, a hot-button issue for voters.
Rents have started to ease after years of relentless growth. That’s one reason Goldman Sachs expects the Personal Consumption Expenditures (PCE) index to trend toward the Fed’s 2% target. The firm also noted that the one-time price bump from last year’s tariffs is fading, which should further ease inflation.
“Healthy economic and revenue growth, continued profit strength among the largest US stocks, and an emerging productivity boost from AI adoption should lift S&P 500 EPS by 12% in 2026 and 10% in 2027,” Goldman’s Ben Snider wrote on Wednesday.
The latest data shows worker productivity in the third quarter grew at its fastest clip in two years, as businesses spent heavily on AI and pulled back on hiring.
That productivity boost is expected to broaden the stock market rally, as the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) touched all-time highs last week. Materials (XLB), Industrials (XLI), Energy (XLE), and Consumer Discretionary (XLY) were some of the leading sectors as investors trimmed tech exposure.
“We’re producing a lot more with less people,” RCM chief economist Joe Brusuelas told Yahoo Finance on Friday, though he believes the full impact of AI is still a couple of years away.
Wall Street strategists predict stock market gains in 2026 driven by Fed rate cuts, tax incentives, and lower-than-expected inflation. (AP Photo/Seth Wenig) ·ASSOCIATED PRESS
Against that backdrop, strategists are watching for sectors and companies positioned to benefit from leaner headcounts and growing AI adoption.
“Pay attention to high human capital businesses — so let’s say finance companies, retail companies, consulting, accounting type businesses,” Clark Capital CIO Sean Clark told Yahoo Finance recently.
“Quality value companies are now starting to experience the benefit of this AI revolution, driving earnings, driving productivity, [and] driving margins higher,” he added.
However, some warn that if the labor market is replaced by AI too quickly, it could pose a sudden threat to the broader economy.
“We term it as the dark side of AI,” Tim Urbanowicz, chief investment strategist at Innovative Capital Management, told Yahoo Finance. Urbanowicz estimates that 15%-20% of the layoffs at the end of last year were related to artificial intelligence.
“If you start to see the jobs market or labor market starting to be replaced by AI in a major way, we think that becomes problematic,” he added.
StockStory aims to help individual investors beat the market.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
Restructuring of work permits and recruitment policies is reshaping construction, agriculture, and services while raising concerns about long-term economic and social effects.
After more than two years of war, Israel’s labor market is feeling the consequences, undergoing a striking transformation as longstanding employment patterns are reshaped by new policies, security developments, and shifting economic needs.
One result of the war has been a sharp reduction in the number of Palestinian laborers permitted to enter Israel. Previously, hundreds of thousands of Palestinians were allowed to work in Israel. That figure has fallen as Israel cites major security concerns and a push to wean itself from reliance on Palestinian workers.
In response, authorities have expanded the entry of foreign workers, altering the composition of the workforce.
For decades, Palestinian workers, mainly from areas in the West Bank controlled by the Palestinian Authority (PA), but also from Gaza, filled a large share of low-paid jobs in agriculture and construction.
They worked through permits allocated and issued by Israel’s Population and Immigration Authority (PIBA) and by the Coordinator of Government Activities in the Territories, the military unit responsible for implementing the government’s civilian and humanitarian efforts in the territories.
An illustrative image of Palestinian laborers working on a construction project in Israel. (credit: Menahem Kahana/AFP via Getty Images)
According to Kav LaOved, a nongovernmental organization focused on protecting workers’ rights in Israel, roughly 100,000 Palestinians were employed in Israel. Since October 2023, the entry of Palestinian workers has been cut to about 8,000, driven by heightened security restrictions and political tensions that have disrupted the labor market and major sectors such as construction.
Data published by PIBA last week showed that almost 61,000 new work permits were issued to foreign workers in 2025 in an attempt to fill the widening labor gap, bringing the total number of foreign workers to 227,044.
This new migrant workforce is employed not only in construction and agriculture, the traditional sectors of non-Israeli labor, but also increasingly in caregiving, trade, services, and renovation, roles previously held by Palestinian workers.
Israelis have long been reluctant to fill many of these positions. Part of that reluctance stems from the high cost of living and the preference among many Israelis for higher-paying jobs over lower-paid occupations in sectors now staffed by foreign workers.
A government decision in May 2024 sought to increase the number of foreign workers, raising the quota to 3.3% of the country’s population. For now, a shortfall of 100,000 workers remains.
According to Moshe Nakash, director of the Foreign Workers Administration at PIBA, that quota could still rise.
“There are large numbers of workers coming into Israel in an effort to fill the different quotas of each sector,” Nakash told The Media Line. “This is part of a great effort on our part to close the gap.”
The recalibration of the workforce has been most acute in sectors heavily reliant on manual labor. Construction firms, already grappling with staffing shortages, are taking advantage of the influx of foreign workers. At the same time, restaurants and manufacturing have begun tapping into foreign labor quotas.
But while foreign labor alleviates immediate staffing shortages, it also adds complexity to wage dynamics and labor-rights enforcement in a market still reeling from conflict-related disruptions.
“What we are seeing is no less than a structural change of the labor market, and decision makers must understand the meaning of this,” Dror Litvak, CEO of ManpowerGroup Israel, told The Media Line. “This is not some temporary event and could eventually lead to a rise in unemployment amongst Israelis.”
BOI: Unemployment in Israel at 2.9%
Unemployment in Israel currently stands at 2.9%, according to figures published by the Bank of Israel.
Litvak noted: “If someone thinks that unemployment will remain low, they are mistaken. Foreigners are already occupying positions previously occupied by Israelis.”
Hamas’ surprise attack and the subsequent war shook Israel to its core. In the labor market, that upheaval left decision makers and employers scrambling for solutions. One key response has been not only to increase the number of foreign workers admitted into the country, but also to expand the sectors in which they are permitted to work.
“Decision makers are not looking at the long term, and they are trying to put the fires out,” said Litvak. “This will create a completely different reality.”
Litvak does not see Palestinian laborers being allowed back into Israel in the coming decade.
For Palestinian workers, their families, and the Palestinian economy, this is a major blow.
“This is creating a major financial and social crisis that is politically motivated and not based on clear-cut security reasons,” Shai Grunberg, a spokesperson for Gisha, an Israeli NGO that focuses on freedom of movement for Palestinians, told The Media Line.
Even before the war, the far-right Israeli government pushed to adopt policies that would sever ties with the PA. The outbreak of the war only intensified those calls.
Some Israeli security officials have called for Palestinian work permits to be reinstated to prevent a major crisis in the PA. The government has not acted on those calls.
For now, workers from Thailand and Sri Lanka are stocking supermarket shelves and cleaning the streets. Employers say they are satisfied with the new labor supply.
Litvak also raised concerns about the employment conditions of the new workers.
“Israel is at risk of creating a slave market rather than a job market,” he said. “The conditions that some of the workers live in are worse than Israeli prisoners, and in the end, this will create even greater problems.”
In a separate move that has alarmed international aid agencies and the United Nations, Israel has begun a sweeping regulatory overhaul that would drastically affect the work of foreign humanitarian NGOs in Gaza and the West Bank.
Under new rules enforced from the beginning of 2026, more than 30 organizations face license suspension unless they comply with stringent transparency and registration requirements, including detailed disclosure of Palestinian staff and funding sources.
Israel will no longer allow NGOs to bring supplies into Gaza or send international staffers into the war-torn territory.
“The most acute consequence will be to the ability of the civilian population in Gaza to survive,” said Grunberg. “Since the beginning of the war, Israel has hindered the work of the NGOs, and this new mechanism, with its disproportionate and draconian measures, will deal a severe blow to essential health services in Gaza.”
Proponents within the Israeli government maintain that the measures are needed to prevent exploitation of aid by Palestinian terrorist groups.
Citing security concerns, the government is determined to implement the policy despite international condemnation. Coupled with tighter control of Palestinian movement and the drastic reduction in Palestinian laborers, Israel appears to be seeking to sever as many connections as possible to Palestinians and the PA.
“These are different expressions of the same political rationale by which further control over Palestinians and their movements has a greater impact on the civilian population in the West Bank and Gaza,” said Grunberg. “This is a policy that is intended to bring about the falling apart of the fabric of Palestinian life.”
The reality emerging is not merely a wartime adjustment, but what appears to be a fundamental shift in Israel’s labor market. The rapid replacement of Palestinian workers with foreign labor, alongside tighter restrictions on humanitarian actors, reflects a policy of breaking away from dependence on Palestinian labor, with far-reaching consequences.
While these measures may ease immediate economic pressures, they risk creating new vulnerabilities, straining labor standards, deepening the crisis in an already struggling Palestinian economy, and potentially fueling greater instability over time.
Concerns about how AI will affect workers continue to rise in lockstep with the pace of advancements and new products promising automation and efficiency.
As enterprises more meaningfully adopt AI, some may take a closer look at how many employees they really need.
In a recent TechCrunch survey, multiple enterprise VCs said AI will have a big impact on the enterprise workforce in 2026. This was particularly interesting because the survey didn’t specifically ask about it.
Eric Bahn, a co-founder and general partner at Hustle Fund, expects to see affects on labor in 2026. He’s just not sure exactly what that will look like.
“I want to see what roles that have been known for more repetition get automated, or even more complicated roles with more logic become more automated,” Bahn said. “Is it going to lead to more layoffs? Is there going to be higher productivity? Or will AI just be an augmentation for the existing labor market to be even more productive in the future? All of this seems pretty unanswered, but it seems like something big is going to happen in 2026.”
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Marell Evans, founder and managing partner at Exceptional Capital, predicted companies looking to increase AI spending, will pull money from their pool for labor and hiring.
“I think on the flip side of seeing an incremental increase in AI budgets, we’ll see more human labor get cut and layoffs will continue to aggressively impact the U.S. employment rate,” Evans said.
Rajeev Dham, managing director at Sapphire, agreed that 2026 budgets will start to shift resources from labor to AI. Jason Mendel, a venture investor at Battery Ventures, added that AI will start to surpass just being a tool to make existing workers more efficient in 2026.
“2026 will be the year of agents as software expands from making humans more productive to automating work itself, delivering on the human-labor displacement value proposition in some areas,” Mendel said.
Antonia Dean, a partner at Black Operator Ventures, said even if companies aren’t shifting labor budgets toward AI projects, they will likely still say AI is the reason for layoffs or a reduction in labor costs anyway.
“The complexity here is that many enterprises, despite how ready or not they are to successfully use AI solutions, will say that they are increasing their investments in AI to explain why they are cutting back spending in other areas or trimming workforces,” Dean said. “In reality, AI will become the scapegoat for executives looking to cover for past mistakes.”
Many AI companies argue their technology doesn’t eliminate jobs but rather helps shift workers to “deep work” or to higher-skilled jobs while AI just automates repetitive “busy work.”
But not everyone buys that argument, and people are worried that their jobs will be automated. According to VCs who invest in that area, it doesn’t sound like those fears will be quelled in 2026.
Construction employment on Long Island saw another year-over-year drop in September, the seventh straight month of declines, according to a new report from the Associated General Contractors of America.
Nassau and Suffolk counties lost 5,600 construction jobs from Sept. 2024 to Sept. 2025, a 7 percent year-over-year decline, falling from 83,400 to 77,800, the AGCA reports. Long Island’s construction employment decline was the fourth largest drop of the 360 metro areas in the report.
Regionally, the number of construction jobs in New York City was down 7 percent, losing 9,900 jobs from Sept. 2024 to Sept. 2025, falling from 145,000 to 135,100. New York City’s job loss was the largest in the country for that period.
Association officials noted that demand for industrial and data center construction remains robust, but demand in other sectors flags.
“The latest data on employment by metro area shows how spotty construction activity has become,” Ken Simonson, the association’s chief economist, said in a written statement. “Although a few project types, such as data centers, power, and certain infrastructure and manufacturing plants, are booming, many metro areas are experiencing a drop in activity.”
Metro areas adding the most construction jobs over the last year include the Arlington-Alexandria-Reston, Va. Area, which added 7,900 jobs for a 9 percent increase; followed by the Washington D.C area, which added 6,200 jobs for a 13 percent gain; and the Charlotte, N.C. area gaining 4,400 jobs for a 5 percent rise.
Besides New York City, the metro areas seeing the largest drops in construction employment from Sept. 2024 to Sept. 2025 include the Los Angeles-Long Beach-Glendale, Calif. area dropping 6,100 jobs for a 4 percent decline; the Las Vegas area, which lost 5,700 jobs for a 7 percent drop; and the Riverside-San Bernardino-Ontario, Calif. area which lost 5,600 jobs for a 5 percent drop.
The entire job market is in turmoil, we know, but a new report highlights that it’s worse for this year’s graduating class than for people starting their working lives. Most job seekers say the entire process of finding and then applying for work took much more effort. If your company is looking for fresh, young talent, this news could inspire you to change your own recruiting efforts.
The new study, from the National Association of Colleges and Employers (NACE) and Texas-based recruitment service Indeed, found that on average Class of 2025 graduates sent out 10 job applications for every six that the Class of 2024 sent, HRDive reports. They were also sending out applications earlier, beginning around 6.5 months before graduating, compared to an average of 6 months in 2024. This might suggest they’re conscious of the worsening state of the employment market, but NACE said it thinks the opposite is true.
In a press release accompanying the report, the group noted that the mean number of job offers this year’s graduates received after sending out applications was 0.78, a significantly low figure, and lower than last year’s 0.83 and seriously down from the average 1.13 and 1.14 offers the Classes of 2023 and 2022 landed during the same phase of their life. But compared to last year, graduates were keener to accept these offers: 86.7 percent of seniors who received an offer accepted it, compared to 81.2 percent last year and 85.1 percent in 2023. The differences here are more subtle, but still point to a graduating year that’s slightly keener to secure a job sooner rather than later.
Graduates were, compared to earlier classes, “more likely to say they were unsure about their plans, and more were planning to enter the military, suggesting they were unsure about private-sector employment,” NACE noted. Meanwhile many of this year’s graduating class understand the value of experiential education, and 84 percent of the cohort took part in an “internship, co-op, or other experiential learning program” the report said, also noting that students “overwhelmingly” said internships were the top way to develop their skills.
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Curiously, despite other reports suggesting that AI use during the job application process is soaring to the point that recruiters are overwhelmed, fewer than one in three students in the NACE survey said they’d used the controversial tech during the application process, and the report says only 22 percent of employers used the tech themselves during recruiting.
The big lesson for your company here is that the changes in the job market affecting new graduates may impact the business of finding and recruiting new talent. The pool of available candidates may be bigger than expected, and the number of applications you receive for open posts may be up compared to what your HR team has seen in recent years — affecting the time and effort they need to put in to downselect to the final choice.
Meanwhile, a separate report again highlights that the kind of perks you may have to offer to attract Gen-Z workers may be different from those that appealed to older generations of worker. Professional services company KMPG’s new U.S. CEO Timothy Walsh is trying to lure Gen-Z workers to the firm by offering up a new office suite that’s “outfitted with moody lounges and a barista bar,” according to a report at Fortune. Having joined the firm as an intern over 30 years ago, Walsh has seen many aspects of the business change—including the new push for entry-level workers to manage entire teams of AI agents. Refurbished headquarters are an effort to try to attract workers to work in the office more per week, as opposed to strict RTO mandates like those from companies like Amazon and JPMorgan, but they also are designed to facilitate hybrid work setups, since these remain popular.
Walsh is clearly aware of this fact, and also that Gen-Z staff are tending to look for more meaningful job perks than appeal to older age cohorts, as well as employers that facilitate their desire for better work-life balance. All of this could feed into the way you try to appeal to the Class of 2025.
Job creation by U.S. companies has nearly flatlined since last spring, with most employers only hiring to replace departing staff members, or leaving those positions vacant. The bad newsfor people looking for work is that thistrend may be gaining momentum as many businesses decide they can continue growing while either maintaining or cutting current headcounts.
That thinking contrasts the conventional wisdom often cited to explain why hiring rates have fallen to a measly monthly average of 26,750 new jobs filled since May. Many analysts said that hesitation to recruit was based in large part on uncertainties employers faced about future economic growth. Other experts pointed to the still evolving effects that import tariffs, mass deportations, and relatively robust inflation are having on businesses.
Another reason cited was the spreading effort by companies in adopting artificial intelligence(AI) to automate tasks that many employees previously performed. That move has provoked thousands of layoffs, while also fully taking over many entry-level positions that younger job seekers have habitually relied on.
But while all those factors may be shaping the wider business community’s current aversion to hiring, other evidence suggests some companies recently made indefinitely freezing or decreasing their headcounts a central growth strategy.
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“We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” Beth Galetti, Amazon senior vice president of people, experience, and technology wrote in a staff memo Tuesday announcing “an overall reduction in our corporate workforce of approximately 14,000 roles.”
Similarly, on Tuesday UPS said it has already cut 48,000 jobs in 2025 alone in an effort to improve productivity. Other companies have also adopted the tactic.
“By reducing the size of our team, fewer conversations will be required to make a decision, and each person will be more load-bearing and have more scope and impact,” Meta’s chief AI officer, Alexandr Wang, said in a memo obtained by Business Insider that announced last week’s 600 job cuts at the company’s Superintelligence Labs division.
‘Preemptively hold the line’
Both Wang and Galetti noted their dramatic cuts would be followed by the creation of future, presumably far fewer jobs. But a recent Wall Street Journal report offered evidence that the trend to continually reduce net staffing levels is spreading across big U.S. businesses.
The paper quoted a JPMorgan Chase executive’s observation that the bank now has a “very strong bias against” reflexively hiring people for needs it might fulfill otherwise. It also noted Goldman Sach’s stated intention to “constrain head count growth through the end of the year,” and Walmart’s similar objective of keeping overall staffing flat.
In many cases it examined, the Journal said the increased use and performance of AI are allowing businesses to continue growing, innovating, and serving customers with fewer employees than previously required.
“If people are getting more productive, you don’t need to hire more people,” Airbnb’s chief executive Brian Chesky told the paper, saying he plans to keep headcount stable at around 7,000 employees over the next year. “I see a lot of companies preemptively holding the line, forecasting, and hoping that they can have smaller workforces.”
Yet there are also signs that in addition to hedging against economic uncertainties and reaping the efficiencies provided by AI, there may be another calculation in the current moves to freeze or cut staffing levels. That thinking may internalize the habitual approval of Wall Street investors to layoff announcements, as companies move to reduce their salary bases, increase efficiencies, and boost their bottom lines.
“(H)istorically, if someone leaves, if Jane Doe leaves, I’ve got to backfill Jane,” Intuit chief financial officer Sandeep Aujla told the Journal. To weaken that that reflex, Aujla said, company managers are required to make convincing arguments for replacing departing employees to get approval, with new hiring now viewed as a last resort.
As a result, Aujla said, both layoffs and voluntary quits encourage managers to ask, “Is there an opportunity for us to rethink how we staff?”
‘Companies do not want to hire’
A similar reflection process in the opposite direction is now underway across social media platforms. A growing number of users are posting their beliefs that even companies that advertise job openings no longer have any intention of actually filling them.
Whether commentators attribute that to continual downsizing strategies, AI as an opportunity for replacing employees, or the economic uncertainty that has reduced hiring levels since May, many online commentators now suspect the entire employment and recruitment process is broken, or even rigged.
“Companies do not want to hire new employees,” posted JackReaper333 on a recent Reddit thread. “They want their current employees to (a) produce more and (b) do the work of any other employees that quit… Companies will only hire new employees when they are forced to do so, that is to say, things have gotten so bad that even the higher-ups have to finally admit that their current employees cannot produce anymore.”
Some redditors sharing that view also interpret the abundance of job openings overlapping with flat or shrinking hiring rates as reflecting an ulterior motive behind recruitment notices. One thread claimed employers who are advertising opportunities, or even interviewing candidates, “are prospecting, not hiring.”
“I have seen first hand, companies will just prospect without actually hiring anyone,” wrote thread initiator pastelpaintbrush. “They will post job listings, do interviews, and never hire. They just want to see what’s in the job pool.”
Another redditor offered an alternative analysis that factors in the the increasing use of AI to automate the scanning and analysis of job applications.
“They want to data mine our resumes and show their investors that they are ‘growing,’” said Feisty-Problem516. “Making job postings is a win-win. There is no intent to hire.”
While those allegations are clearly too broad to apply to many, perhaps even most businesses recruiting people, they do reflect darkening public opinions about the health of the U.S. employment market. Those dim views aren’t likely to improve after redditors get a look at the Journal’s report quoting business leaders’ no-hire strategies seeming to confirm their fears.
For decades, businesses have avoided hiring candidates whose experience and abilities surpassed the requirements of the jobs they sought to fill. That hesitation was mostly based on concerns that overqualified recruits would quickly become bored with their work and leave for bigger challenges. But a new survey shows employers are showing more willingess to signing on highly capable applicants , with a clear majority of hiring managers now regularly considering people whose aptitudes overshadow the positions they’re vying for.
That significant shift in hiring attitudes was revealed in a recent survey of 1,000 U.S. human relations executives by staffing solutions company Express Employment Professionals. What it found was that in — stark contrast to deep-rooted reluctance in the past to seriously consider people whose experience surpassed the jobs they’d applied for — 70 percent of hiring managers respondents said they now routinely consider fillings opening with overqualified applicants.
What’s changed? Survey respondents said the additional strengths that overqualified workers offer outweigh the risks that they may get bored and leave faster than less experienced applicants. For example, half of the participants said those more capable prospects bring more confidence to the job than less qualified candidates, with 48 percent saying they’re more productive as well.
About 47 percent of respondents said more experienced hires demonstrate better decision-making abilities than other candidates, and 45 percent appreciated them for needing little or no training to start working at full speed. Better still, 46 percent of participating hiring managers cited the ability of overqualified workers to mentor and support younger or less capable employees as an extra benefit.
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But despite that fundamental shift of HR managers’ attitudes about placing people in positions they’re clearly overqualified for, survey participants haven’t rid themselves of all their past reservations.
Significantly, nearly three-quarters of respondents said they still consider overqualified hires likely to bolt for better opportunities that come along. Awaiting that, 75 percent of survey participants said they believed more experienced and skilled hires often struggle to remain motivated once they’d landed and settled into the new job.
For those reasons, 58 percent of respondents said they’re at times still inclined to train a new or less qualified employee for a position, rather than risk higher turnover by picking stronger candidates more likely to get bored and move on.
Job seekers are of mixed minds about the changing views of hiring managers. Younger survey respondents said they fear the shift leaves them at a distinct disadvantage to overqualified candidates. Sixty-seven percent of Gen Zers and 60 percent of Millennial respondents said it’s impossible for them to compete against more experience applicants for the same job.
Those numbers rise to 84 percent of Gen Zers and 77 percent of Millennials who think companies systematically favor overqualified candidates over others. Around 71 percent of both cohorts cited the extra benefits more experienced workers bring to the job as the reasons employers prefer them. Those concerns among Gen X respondents were lower than those younger workers, but still surpassed the 50 percent bar.
But with national job creation nearly flat as companies limit hiring mainly to replacing departing workers, it‘s unrealistic to expect overqualified candidates to steer clear of positions with lower requirements. In fact, even most younger survey respondents who complained of being at a disadvantage to more experienced applicants appear willing to seek a similar upper hand when they’re pursuing employment opportunities in competition with less skilled people.
Eighty-seven percent of all job hunters surveyed said it was entirely appropriate to apply for work they’re overqualified for, with 65 percent saying they’ve already done so. While nearly 60 percent of those respondents said the obligation to generate an income was the main motivator for using that advantage, 56 percent said those jobs also offer better work-life balance. Around 41 percent said those situations allowed them to break into or remain in professions they’re passionate about.
So how should employers still torn between past hesitations to hire overqualified people, but increasingly aware of the qualitative advantages of filling vacancies with skilled candidates in the current labor market react to those changes? Express Employment International president Bob Funk Jr. suggests they remain pragmatic in their hiring decisions, and carefully analyze which candidates can best provide what an individual job and the entire company needs from them.
“Overqualified candidates represent a chance to secure top talent in today’s market,” said Funk in news release announcing the survey’s results. “The key is to focus on skills-based hiring, which widens the talent pool by looking beyond résumés and degrees and makes the best use of a candidate’s abilities and ambition. Without that alignment, the risk of a quick exit is real.”
NEW YORK (Reuters) -The U.S. labor market remained mired in its low-hiring, low-firing doldrums through September, though the economy overall “may be on a somewhat firmer trajectory than expected,” Federal Reserve Chair Jerome Powell said on Tuesday.
He noted that at policymakers will take a “meeting-by-meeting” approach to any further interest rate cuts as they balance job market weakness with the fact that inflation remains well above their 2% target.
Powell also said the end of the central bank’s long-running effort to shrink the size of its holdings, widely known as quantitative tightening, or QT, may be coming into view.
His comments came from the text of a speech prepared for delivery before a gathering held by National Association for Business Economics in Philadelphia.
MARKET REACTION:
STOCKS: U.S. stocks were mixed, with the Dow and S&P 500 up on the day, while the Nasdaq was down.
BONDS: U.S. Treasury yields extended their fall, with the yield on the benchmark 10-year note slipping to 4.03% and the two-year note down at 4.1%.
FOREX: The dollar index extended losses, now down 0.3% at 99.03.
COMMENTS:
STEVE SOSNICK, CHIEF STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT:
“The reason for the sell-off overnight was concerns about the trade war re-accelerating between the US and China. But the markets decided that this isn’t really a problem, at least in the short term.”
“The market was going up anyway. We were down 10 points before he started speaking so this is just the cherry on top of the cake on today’s rally … but the bulk of the move was unrelated to his comments.”
ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK: “The fact is the (stock) market was extended. It pulled back to support technically, which is the 50-day moving average… and bounced off of it.”
“The Fed said nothing has changed. Even if (trade) tensions escalate… the Fed is still going to cut rates with the stock market at all-time highs. So, fundamentally, we have a tremendous tailwind coming into effect in the near future.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:
“I don’t think (Powell) is changing his tune whatsoever. He’s saying that the economy is on solid footing, but he’s also saying we have weakness. What he’s doing is he’s preparing the markets for a series of rate cuts, but not necessarily in a sequential order.”
“He’s saying is he’ll cut (interest rates) by 25 basis points at the end of this month then they’ll assess the situation. And if the labor market continues to weaken and actually loses jobs, then he might be setting us up for a jumbo cut of 50 basis points in December.”
“He’s preparing the markets for a rate cut, but he also doesn’t want the markets to assume rate cuts are a given. He’s using labor market weakness as a hedge.”
MICHAEL JAMES, EQUITY SALES TRADER, ROSENBLATT SECURITIES, LOS ANGELES:
“I don’t think any of these comments from Chairman Powell are going to have any direct impact on the overall market. It continues to be a market of sentiment and positioning. The Trump tariff tweet from Friday, causing all of the decline, seemed to get shrugged off with some of the comments over the weekend. We had a decent rally yesterday and pulling back this morning on some of the China shipping moves but that also was being relatively dismissed. You can see that in the magnitude of the rally that we’ve had from this morning.”
“The bulls remain fully in charge and until that’s shaken with something more significant than these comments from Chair Powell or anything else, that’s likely to be the case into the start of third-quarter tech earnings next week.”
“There are bigger factors in place related to positioning and up the start of tech earnings season next week that are going to be far bigger determinants of the market’s direction than these comments from Chair Powell will be.”
(Reporting by Stephen Culp, Sinead Carew, Caroline Valetkevitch, and Twesha Dikshit)
AI evangelists continue to insist that AI is improving workers’ efficiency and thus business productivity, freeing up staff from mundane duties to do more meaningful work. Not as many boosters are cheering the fact that it’s just as easy for companies that have gone all in on the new technology to cut labor costs by replacing people’s jobs. According to a new report thousands of jobs have already gone from the job market this year as AI has assumed those duties instead, and fully 7,000 of the losses happened in September alone. All of this may feed into your thinking about rolling out AI at your own company.
The data, from Chicago-based executive outplacement firm Challenger, Gray & Christmas, attributes 17,375 job losses to adoption of AI tech since the start of 2025. Most of these cuts were made public in the second half of the year, industry news site HRDive reports.
The numbers are dramatic, especially since a similar report from Challenger in July said that among some 20,000 jobs lost to “automation” in the first half of the year, only 75 were directly connected to AI. Andy Challenger, senior vice president at the firm, told CFODive at the time that the suspicion was that many more jobs were actually lost to AI. “We do see companies using the term ‘technological update’ more often than we have over the past decade, so our suspicion is that some of the AI job cuts that are likely happening are falling into that category,” Challenger said then, also noting that some firms were being careful because they “don’t want press on it.”
In the new report, Challenger noted that it’s mainly tech firms that are “undergoing incredible disruption,” because of AI. Challenger also backed up many earlier reports by noting that the buzzy, controversial tech is “not only costing jobs, but also making it difficult to land positions, particularly for entry-level engineers.”
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HRDive notes that it’s losses at Salesforce that may be linked to those massive AI-related job cuts in recent months, with Salesforce CEO Marc Benioff noting in August that customer service staff numbers were slashed by about 4,000 after AI agents took on some customer handling duties. The interesting wrinkle here is that Salesforce is one of the big tech names that is pivoting aggressively and openly to adopting AI tech, and is even selling it to its customers with the promise that agent-based AIs can save them money. Benioff in early 2025 also said “my message to CEOs right now is that we are the last generation to manage only humans.” In his vision for future company leadership, managers will be steering both AIs and humans through their day to day operations.
While 17,000 jobs lost to AI sounds like a lot, it’s dwarfed by other causes, the Challenger report shows. DOGE-related actions is the “leading reason for job cut announcements in 2025,” the report notes, with 293,753 planned layoffs connected to DOGE activities, including reductions to federal workforce numbers and the cutting of contractor deals. Nearly 21,000 more jobs have been lost as part of what Challenger’s report says is “DOGE Downstream Impact,” where funding cuts have hit nonprofits that depend on federal grants. Traditional market and general economic concerns drove another 208,227 cuts in 2025, the report also notes. This means DOGE and the typical workings of the economy are responsible for around 30 times as many job losses than AI.
But it would be unreasonable to assume AI’s body count won’t rise, considering Big Tech’s push to get AI into the workplace, while developing increasingly capable AI tools that can handle human jobs. And while Challenger notes that tech-centric firms are bearing the brunt of AI-related job cuts right now, it would be sensible to guess that other industries will soon follow.
What’s the takeaway for your company?
Primarily that it may be a good idea to reassure your staff that if you’re rolling out AI tools to streamline operations, you’re not actually planning on downsizing your workforce. ”AI won’t be stealing anyone’s job here” is a strong message that will build your team’s trust, assuming that this is actually the case.
Another side effect may be a glut of workers in the job marketplace. Since many job seekers are using AI tools to boost their hunt for new employment, you may actually see many more applicants than before for open positions at your company, and your HR team may be quickly overburdened.
Analysts predict holiday job gains may fall to the lowest level since 2009.
Major chains like Bath & Body Works and Radial are scaling back seasonal hires.
Experts forecast smaller holiday spending growth compared to last year.
Uncertainty over the economy and tariffs is forcing retailers to pull back or delay plans to hire seasonal workers who pack orders at distribution centers, serve shoppers at stores and build holiday displays during the most important selling season of the year.
American Christmas LLC, which creates elaborate holiday installations for commercial properties such as New York’s Rockefeller Center and Radio City Music Hall, plans to hire 220 temporary workers and is ramping up recruitment nearly two months later than usual, CEO Dan Casterella said. Last year, it took on 300 people during its busy period.
The main reason? The company wants to offset its tariff bill, which Casterella expects to be as big as $1.5 million this year, more than double last year’s $600,000.
“The issue is if you overstaff and then you underperform, it’s too late,” Casterella said. ”I think everyone’s more mindful now than ever. ”
Online behemoth Amazon Inc. said Monday it intends to hire 250,000 full-, part-time and seasonal workers for the crucial shopping period, the same level as a year ago.
But job placement firm Challenger, Gray & Christmas forecasts overall holiday hiring for the last three months of the year will likely fall under 500,000 positions. That’s fewer than last year’s 543,000 level and also marks the smallest seasonal gain in 16 years when retailers hired 495,800 temporary workers, the firm said.
Among other companies cutting holiday payrolls: Radial, an e-commerce company that powers deliveries for roughly 120 companies like Lands’ End and Cole Haan and operates 20 fulfillment sites. It plans to hire 6,500 workers, fewer than last year’s 7,000, and is waiting to the last minute to ramp up hiring for some of its clients, chief human resources officer Sabrina Wnorowski, said.
Bath & Body Works, based in Reynoldsburg, Ohio, said it plans to hire 32,000 workers, below the 32,700 a year ago.
“We saw real strong signals that there’s been a cooling in the labor market, even beyond what our expectations were in the first nine months of the year,” Challenger’s senior vice president Andy Challenger said.
Challenger also noted companies are using artificial intelligence bots to replace some workers, particularly those working in call centers. And he’s also seeing companies hiring workers closer to when they need them.
Meanwhile, the list of companies staying mum about their specific holiday hiring goals keeps growing. Target Corp., UPS and Macy’s are declining to offer figures, a departure from years past.
Holiday hiring: the first clues to what’s in store for spending
Retailers’ hiring plans mark the first clues to what’s in store for the U.S. holiday shopping season and come as the U.S. job market has lost momentum this year, partly because Trump’s trade wars have created uncertainty that’s paralyzing managers trying to make hiring decisions.
The Labor Department reported in early September that U.S. employers — companies, government agencies and nonprofits — added just 22,000 jobs in August, down from 79,000 in July and well below the 80,000 that economists had expected.
The government shutdown, which started Oct. 1 and has delayed the release of economic reports, could worsen the job picture.
In an attempt to exert more pressure on Democratic lawmakers as the government shutdown continues, the White House budget office said Friday mass firings of federal workers have started.
Analysts will be closely monitoring the shutdown’s impact on spending. For now, many retailers say that consumers, while resilient, are selective. Analysts will also be watching how shoppers will react to price increases as a result of high tariff costs in the next few months, experts said.
Given an economic slowdown, holiday spending growth is expected to be smaller than a year ago, according to several forecasts.
Mastercard SpendingPulse, which tracks spending across all payment methods including cash, predicts that holiday sales will be up 3.6% from Nov. 1 through Dec. 24. That compares with a 4.1% increase last year.
Deloitte Services LP forecasts holiday retail sales to be up between 2.9% to 3.4% from Nov. 1 through Jan. 31. That’s compares with 4.2% last year.
And Adobe expects U.S. online sales to hit $253.4 billion from Nov. 1 to Dec. 31, representing a 5.3% growth. That’s smaller than last year’s 8.7% growth.
A more flexible approach
Companies are increasingly wanting to hire workers closer to when they need them, experts said.
“In today’s environment, brands are really looking for us to be agile,” Radial’s Wnorowski said.
So for some of its clients, Radial will now be hiring two weeks before Thanksgiving weekend, the traditional start for the season, instead of four weeks before the kickoff. Radial is also training holiday hires faster with new technology that’s simplifying their tasks. It used to take a couple of days to train a worker, but now it only takes a couple of hours, she said.
Meanwhile, Target will offer current workers additional hours and then will tap into a separate pool of workers— 43,000— who pick up shifts. The Minneapolis-based company also hires seasonal workers across its nearly 2,000 stores and more than 60 distribution facilities to meet demand, it said.
For the past few years, Walmart, the largest private employer, has been offering its workers extra hours available during the holidays, a Walmart spokesperson said, noting it’s worked well and the feedback from customers and workers has been “overwhelmingly positive.”
The Bentonville, Arkansas-based retailer said there may be some seasonal hiring on a store-by-store basis, but most locations will dole out those hours to current workers.
Economic data blackout could create challenges
Waiting until the last minute to hire could mean a mad scramble to find talent, but companies say that with the slowing economy, they don’t anticipate having a hard time.
Meanwhile, the temporary halt of the release of economic reports leaves retailers in the dark about sales forecasts and the workers they may need.
“Certainly, for our customers not having access to data will put more of a challenge on their ability to forecast,” Wnorowski of Radial said. “But we’ll stay very close to them as we go into peak and we’ll adjust as soon we see things changing.”
With evidence mounting that most companies are now limiting hiring to replacing departing employees, it’s little wonder many people are hugging their current jobs even more tightly. That leaves a growing number of jobseekers facing employment situation that looks daunting— if not worse. The good news for those people is new data shows some sectors continue recruiting energetically, but the bad news is that most available positions aren’t what the majority of job seekers are looking for.
That labor market mismatch was one of the main findings in job post platform Monster’s new report on hiring trends for the third quarter of 2025. Its research showed a majority of its employee-side users continue applying primarily for administrative, office support, software, data, and other information technology positions. But these have become increasingly rare as businesses replace those workers with artificial intelligence, and scale back hiring generally. But that famine of opportunity resembles something closer to a feast for people considering work with healthcare, sales, customer service, and logistics companies that continue increasing headcounts.
In case current job seekers were too depressed about their prolonged hunt for work to catch it, the message of Monster’s report that is that people may need to shift their searches from sectors they’d prefer to work in to those still hiring.
Healthcare companies regularly posted some of the biggest job creation numbers over the past year, so it’s little wonder Monster said they’re still offering six of the top 10 positions businesses are now filling. Those include registered nurses, physical therapists, radiology technicians or technologists, speech-language pathologists, respiratory therapists, and occupational therapists.
“Clinical roles lead posting volume and remain among the fastest-growing categories,” the report said, citing current staffing shortages and rising demand from aging Baby Boomers requiring more care as drivers of continued hiring.
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Of course, not every programmer, data entry employee, accountant, or marketing writer can simply pivot from those low-hiring professions to more abundant healthcare jobs that often require training or degrees. Luckily there are other options for people willing to make an occupational change.
Also qualifying for Monster’s hit parade of hot jobs are truck and delivery drivers. With logistics companies both understaffed and trying to keep up with ever growing e-commerce sales by online retail clients, increasing headcount has become a priority.
For job seekers more inclined to commercial rather than transportation work, sales representatives and customer service employees finished fourth and 10th on Monster’s most-hired-jobs. The advantages of those position, the report said, is they’re “(r)evenue roles (that) stay funded even in slowdowns.” Companies hiring customer service reps, meanwhile, have a “(r)etention focus” and offer “many hybrid/remote” arrangements.
Other sectors whose hiring trends are on the rise include security services, community and social services, and education and training.
Frustrated job hunters unwilling to shift their work preference to the more available roles probably won’t be receptive to the other main lesson in Monster’s report, either. That involves moving to smaller urban zones where companies are hiring more, and leaving “high-volume hubs (that) cooled quarter-over-quarter” in the current analysis.
That means people in New York, Boston, Chicago, San Francisco, and other low-hiring big cities might want to at least consider a move to the spots posting the highest recent rates of hiring. Those are led by Tacoma, WA, Asheville, NC, Charleston, SC, Colorado Springs, CO, and Sacramento.
For everyone else, Monster’s report had a few other suggestions to assist their job hunting struggles.
The first was to cease doing mass-volume applications, and focus on fewer, high-priority openings. As part of that, candidates should make the effort to tailor applications and resumes to the exact skills companies have specified, and stress other transferrable experience that would be of use in those positions.
“It’s not about quantity; the key is not applying to hundreds of jobs and seeing what sticks,” Monster career expert Vicki Salemi told CNBC. “Actually, it’s the reverse. It’s having a specific job search.”
The second suggestion was to make peace with the high likelihood that it’s going to take considerably more time to strike employment paydirt than it has in recent years.
“The slower hiring life cycle doesn’t mean it’s not happening, it’s just delayed as employers do their due diligence,” the Monster report said. “It’s important for job seeker to be consistent with their job search efforts and to focus on what they can control. When they’re actively interviewing, candidates should continue to apply to new opportunities and expand their network.”
And if that doesn’t work, driving a truck in Albany might be more the most viable short-term employment option.
Recent college graduates face a remarkably inhospitable labor market as businesses pull back on hiring, and now suffer even higher unemployment rates than the general U.S. population. Were that not daunting enough, Gen Zers who often assumed heavy student debt loads to pursue higher education can now check to see which degrees are the least useful in securing work these days.
As companies react to uncertainties from import tariffs, mass deportation of immigrants, and clashing indicators about the economy’s health, most U.S. employers have essentially stopped hiring. That precautionary move by businesses to neither increase nor cut headcounts has led to anemic job creation since May. That’s hit recent college grads hard. According to data published by the New York Federal Reserve bank in August, the unemployment rate for diploma holders aged 22 to 27 years old increased to 4.8 percent, compared to the current 4.3 percent national average.
More recent statistics from the Federal Reserve Bank of St. Louis measured the jobless rate of those recent college graduates at a slightly lower 4.59 percent. Yet that still marks “a stark contrast to the 3.25 (percent) rate this same demographic experienced in 2019,” it said. It noted that newer entrants to the workforce constituted 10.8 percent of the entire jobless population at the end of August.
A notably uninviting labor market for recent degree earners reflects two major shifts in company hiring practices and priorities.
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First, diplomas that were formerly considered a near guarantee for landing work have lost the power to unlock doors to career-track jobs, as businesses start prioritizing experience and skills — especially using artificial intelligence — over formal education. Second, the so-called college wage premium that often earned degree holders over 80 percent more in pay than non-graduates has fallen to about 25 percent now, especially for people whose majors are in less demand.
“If you’re a college grad and you are underemployed, you’re basically making the same money as a college dropout on average,” said St. Louis Fed economic policy advisor Oksana Leukhina in a recent post on the bank’s site. Many plumbers, contractors, or mold inspectors now earn considerably more, she added.
That shift in hiring and work priorities mean a growing number of college graduates are questioning the value of their educational investments. Now, thanks to recently released data by the New York Fed, those Gen Z job hunters can get a better idea — and perhaps a larger dose of dread — about exactly which degrees suffer the highest underemployment rates.
The NY Fed found people who earned diplomas in criminal justice are the most affected, with a 67.2 percent underemployment rate. They were followed by majors in performing arts 62.3 percent, medical technicians at 57.9 percent, liberal arts at 56.5 percent, and anthropology at 55.9 percent.
Diploma holders with the lowest levels of underemployment were elementary education students at 16.1 percent, miscellaneous education specialists at 16 percent, and nursing grads at 9.7 percent.
One factor shaping those rankings is the shift of business sectors now creating the most jobs.
Healthcare businesses led that hiring push for most of the past year, explaining the low underemployment rates for nursing degree holders. Strong recruitment by booming building companies similarly explains the relatively low 21 percent underemployment rate for construction services graduates.
But Leukhina suggests another factor is the changing attitudes toward the inherent value of college degrees as the primary indicators of a job candidate’s continual learning capacities, adaptability, and increasing capabilities. That means the days may well be over when students could earn a diploma in a field they cared about most — even if it had little practical business application — and use that as their ticket into the labor market to land work they could learn on the job.
As an example, the St. Louis Fed article cited the underemployment rate for criminal justice majors as a reflection of how a degree may no longer be considered necessary, or even desirable by certain employers.
“(L)aw enforcement and security guard positions don’t tend to require college degrees, which could account for the higher underemployment rate for those majors,” it said. “Grads with majors in these fields undermatch at rates of 57 (percent) or higher.”
Still, a New York Fed analysis earlier this year found that even after accounting for student loan repayments and other costs, the average college graduate continues benefitting from a comparatively easier time finding work than non-grads — and being paid more once they do. But as Gen Zers are learning to their increasing dismay, both of those advantages appear to be weakening, if not gradually vanishing as the labor market transforms.
The government shutdown means investors will go without their usual guide to the labor market.
The Bureau of Labor Statistics is unlikely to release the September jobs report as scheduled today, which leaves markets and policymakers without one of their most closely-watched data releases of the month.
But even when the government is open, those numbers aren’t exactly reliable.
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A combination of political noise and inaccurate reporting has undermined credibility — response rates have collapsed, massive revisions are expected, and “official” numbers fluctuate wildly.
That makes alternative indicators more critical.
And right now, Google Search trends offers one of the clearest windows into worker sentiment and labor market conditions.
The charts below illustrate two decades of search volume for the terms “part time,” “second job,” “job security” and “new job.”
All four have spiked to record highs — above both 2008 and pandemic levels — signaling workers are hustling for more hours, looking to supplement income, and worrying over stability.
The shape and trajectories for each search term mirrors 2008 and 2020, but the volume is far higher.
While asset prices continue to surge and the Federal Reserve is expected to continue cutting interest rates, the outlook for jobs remains fragile.
Earlier this week, the private payroll provider ADP reported a decline of 32,000 jobs in September, below economists’ expectations for an increase of 45,000. That also accompanied a downward revision to the August data from a gain of 54,000 to a loss of 3,000.
“It is more difficult than usual to measure the state of the U.S. labor market, with gold-standard economic indicators produced by the federal government unavailable during the shutdown,” said Bill Adams, chief economist for Comerica Bank. “The alternative data sources imply that the job market is still in a low hire, low fire, low gear mode.”
Democratic Senator Elizabeth Warren on Thursday called on the Trump administration to release the September jobs report, according to a CNN report.
The artificial intelligence (AI) age is upon us and, as is the case with every disruptive technology, it is accompanied by doomsayers who fear it will irreparably harm society. “For Some Recent Graduates, the A.I. Job Apocalypse May Already Be Here,” The New York Times recently warned in a recent headline. “There Is Now Clearer Evidence AI Is Wrecking Young Americans’ Job Prospects,” read another headline in The Wall Street Journal. While these pessimistic headlines evoke a Philip K. Dick sci-fi dystopia, emerging data paint a brighter, more nuanced picture.
The Federal Reserve Bank of St. Louis published a report on Tuesday that explores how AI adoption is associated with unemployment, which is up to 4.2 percent according to the Bureau of Labor Statistics’ dismal July jobs report.
The authors use two metrics to offer a tentative, noncausal answer: theoretical AI exposure, which measures whether large language models (LLMs) “can reduce task completion time by at least 50%” in various occupations; and actual AI adoption, based on responses to the Real-Time Population Survey created by Adam Blandin, professor of economics at Vanderbilt University, and Alexander Bick, an economic policy advisor at the St. Louis Federal Reserve. According to the study, computational and mathematical occupations had the most exposure (roughly 80 percent), the highest rate of AI adoption (45 percent), and the largest increase in their unemployment rate between 2022 and 2025 (by 1.2 percentage points). Personal services, meanwhile, had the least exposure (about 15 percent), the lowest rate of AI adoption (less than 10 percent), and the smallest increase in its unemployment rate between 2022 and 2025 (by less than 0.1 percentage points).
This elevated unemployment rate in high-AI adoption occupations should be taken with a grain of salt. Will Rinehart, senior technology fellow at the American Enterprise Institute, tells Reason that both measurements used by the Fed have their own problems. Rinehart explains the actual AI adoption measure is suspect because, “in social media research, self-reports of Internet use ‘are only moderately correlated with log file data.’” To know the actual “actual AI adoption” rate, “we need log file usage data [from] Anthropic and OpenAI,” says Rinehart.
Conveniently, the Stanford Institute for Human-Centered AI also published a working paper on Tuesday that uses Anthropic’s generative AI usage data. The researchers found that, “among software developers aged 22 to 25…the head count was nearly 20% lower this July versus its late 2022 peak,” reports the Journal. The researchers also find that, “for the highest two exposure quintiles employment for 22-25 year olds declined by 6% between late 2022 and July 2025.” These findings lend credence to the viral New York Times article recounting the nightmarish job application struggles of four recent computer science graduates.
But 2022 was a unique year, and using it as a baseline could be skewing the data. As Matthew Mittelsteadt, a technology policy research fellow at the Cato Institute, tells Reason, “Everyone was online during the pandemic [and] tech had record profits.” Mittelstead says the sector may be in the midst of a post-pandemic readjustment that is happening at the same time as AI adoption. The Journal acknowledges these factors could partially account for the reduced employment of 22-year-old to 25-year-old software developers, but argues these “possibilities can’t explain away the AI effect on other types of jobs,” such as customer service representatives.
AI adoption is undoubtedly causally responsible for some workers losing their jobs. Every productive technology replaces the labor of some workers—but it usually does so by complementing the labor of others. The Stanford researchers found precisely this: “While we find employment declines for young workers in occupations where AI primarily automates work, we find employment growth in occupations in which AI use is most augmentative.”
Both of these studies only explore one side of the equation: employment. But AI’s effect on productivity must also be considered to understand its actual economic impact. Rinehart says AI’s productivity effects are real and measurable and citesfourpaperspublished between 2023 and 2025 to substantiate the claim that “productivity gains are typically largest for lower-skilled workers and smaller for highly experienced workers.” On the other hand, Mittelsteadt points to a Massachusetts Institute of Technology “study that found ‘95% of organizations found zero return despite enterprise investment of $30 billion to $40 billion into GenAI.’”
AI is an instance of creative destruction, just as the automobile was for the horse-drawn carriage. Only time will tell if AI is more creative than destructive. But if it’s like the technologies that preceded it, there’s reason to believe that its permanent expansion of the total economic pie will more than offset the unfortunate unemployment effects borne by particular workers in the short run.
Construction employment on Long Island saw another year-over-year drop in May, the fifth straight month of declines, according to a new report from the Associated General Contractors of America.
Nassau and Suffolk counties lost 3,400 construction jobs from July 2024 to July 2025, a 4 percent year-over-year decline, falling from 84,300 to 80,900, the AGCA reports.
Regionally, the number of construction jobs in New York City was down 1 percent, losing 2,000 jobs from July 2024 to July 2025, falling from 145,300 to 143,300.
Nationally, construction employment rose in 184 of 360 metro areas between July 2024 and July 2025, while it declined in 120 metro areas and was unchanged in 56 areas, according to AGCA and new government employment data.
Association officials said a survey of their members to be released on Thursday shows many contractors want to hire more workers but cannot find enough applicants with adequate training or credentials.
“Construction employment has stalled or retreated in many areas for a variety of reasons,” Ken Simonson, the association’s chief economist, said in an AGCA statement. “But contractors report they would hire more people if only they could find more qualified and willing workers and tougher immigration enforcement wasn’t disrupting labor supplies.”
Metro areas adding the most construction jobs over the last year include the
Arlington-Alexandria-Reston, Va. Area, which added 7,900 jobs for a 9 percent increase; followed by the Houston area, which added 6,600 jobs for a 3 percent gain; and the Cincinnati, Ohio area gaining 5,100 jobs for a 9 percent rise.
The metro areas seeing the largest drops in construction employment from July 2024 to July 2025 include the Riverside-San Bernardino-Ontario, Calif. area which lost 7,200 jobs for a 6 percent drop; the Los Angeles-Long Beach-Glendale, Calif. area dropping 6,200 jobs for a 6 percent decline; and the Baton Rouge, La. area, which was down 3,900 jobs in an 8 percent decline.
In September 2022, U.K. Prime Minister Boris Johnson claimed he was leaving office with “unemployment…down to lows not seen since I was about 10 years old and bouncing around on a space hopper.” In reality, the number of people who were economically inactive had risen by almost 400,000, and an enormous rise in the number of people claiming long-term sickness benefits was already underway.
How did Johnson get away with claiming unemployment was exceptionally low? Government unemployment statistics only look at those who are actively looking for work. If someone is studying, a caregiver, or categorized as long-term sick, they are classed as “economically inactive” and are not counted as unemployed.
In the United Kingdom, one-quarter of the working-age population is currently out of work. (For comparison, in the United States, a similar statistic finds that only 16.6 percent of people in prime working ages are out of the labor force.) Once someone becomes economically inactive due to health reasons, their chances of ever reentering employment within a year drop to 3.8 percent. Up to 3,000 new people per day are writing off work and being approved for sickness benefits, now totaling around 4 million people.
These are Britain’s invisible people.
According to a survey published in 2024, a quarter of all Britons say they are disabled. The Department for Work and Pensions says that’s a 40 percent increase in the past decade.
The real surprise is the tens of thousands of young people who are now economically inactive due to long-term sickness. A National Health Service (NHS) Confederation report showed that in 2021–22, over 63,000 people went straight from studying to being economically inactive due to long-term sickness. In 2002, mental and behavioral problems were the main condition for 25 percent of claimants. In 2024, that figure rose to 44 percent. More than half of the rise in disability claims since 2019 was due to mental health or behavioral conditions, according to the Institute for Fiscal Studies.
What is going on?
About 69 percent of those who apply for sickness benefits mention depression, anxiety, or some other kind of mental or behavioral disorder. Mental illness is now being cited by 48 percent of disabled working Brits, making mental health the single biggest problem. Mental illness, quite clearly, is responsible for a large portion of the spike in claimants.
According to data collected by the TaxPayers’ Alliance, a total of 1.75 million people in England received enhanced personal independence payments (PIP) in April 2025, an increase from 734,136 in January 2019. PIP is just one of many types of social security available to working-age claimants, intended to help them deal with the extra costs of disability. It is available to those in work. However, only one-sixth of PIP recipients are working. Some are receiving these benefits for seemingly minor ailments, including acne, constipation, obesity, “old age,” irritable bowel syndrome, writer’s cramp, and food intolerances. (Thirteen people received PIP for factitious disorders in April.) The largest increases, though, were for mental health disorders. In 2019, the number of PIP claimants for autism was 26,256, and by April 2025, this number had jumped to 114,211. For anxiety and depression, it went from 23,647 in 2019, to 110,075 in April 2025. For ADHD, in the same period, it went from 4,233 to 37,339.
As ludicrous as this sounds, approximately 80 percent of PIP claimants are not in work at all. A person getting incapacity benefits and PIP could be getting 23,899 pounds (roughly $32,250), which is already more than the minimum wage. Someone with children is entitled to even more. When PIP is combined with housing benefits, universal credit, and other offerings, someone could be entitled to 27,354 pounds (roughly $37,000) without paying taxes.
Many of these people may well suffer from mental health conditions that make work a struggle. However, in economic terms, the incentives are entirely off. If you can earn more by claiming benefits than you can working, why would you try to work?
These are real people with real potential. Amy from Keighley is 30, looks after her 8-year-old son, and gets long-term sickness benefits. “I do suffer with mental health issues…[complex post-traumatic stress disorder], anxiety, and depression, and things like that,” she said in the documentary Britain’s Benefits Scandal. She has never held a full-time job. She expressed a desire to work but said she’s trapped by the system. “If I went and got a job tomorrow, everything I get would stop from today. Which would then mean that my rent, everything would stop….Where does that leave my 8-year-old?” She said that after taxes, she would need to earn 35,000 pounds ($47,292) a year to replicate the package she is on now.
People like Amy are simply making economic decisions. Would anyone be reasonably expected to risk swapping the security of welfare dependency for the uncertainty of low-paid work in the private sector?
This is the welfare trap.
It has left Britain in a situation where taxpayers are footing the bill for over 120 billion pounds a year on working-age benefits alone. This is financially unsustainable—not to mention immoral to expect the rest of society to bear the brunt of these costs.
It is also a tragic waste of human potential. These are people that the state has consigned to a lifetime of worklessness. Where is the evidence that, for those with poor mental health, the best thing for them is to be told to stay at home and never work? Work gives people dignity, structure, and a reason to get out of bed in the morning.
Well-intentioned politicians have failed. This year, the Labour Party government tried to make minor cuts to PIP and faced an enormous rebellion from within the party, resulting in a U-turn. It is a welfare policy crisis, a big government crisis, and a warning to the rest of the world that well-intentioned “generous” welfare benefits can inadvertently end up wasting so many people’s lives.
In the U.S., this is increasingly becoming the case. The American welfare system is costing well over $1.2 trillion a year, according to the Congressional Budget Office, encompassing more than 80 federal programs. The system discourages beneficiaries from seeking work. In 1979, American families living below the poverty line earned about 60 percent of their income from work. In 2021, that number had dropped to an all-time low of around 25 percent. Pandemic-era benefits and increased eligibility accelerated these trends. The increased size of the social “safety net” created a cycle of dependency, trapping people in poverty.
Almost half of the American population lives in a household where at least one person receives some form of government benefit. The increasing size of the welfare state, just as in Britain, is creating a culture of dependency.
There is nothing compassionate about a system that wastes millions of lives. Britain’s sickness is a warning to the world. When the state pays people to give up on themselves, many will. For people to flourish, they must not be told they are too broken to work; they should be told they are capable of so much more.
(Bloomberg) — The selloff in stocks intensified and bond yields tumbled as a weak jobs report fueled worries that the Federal Reserve’s decision to hold rates at a two-decade high is risking a deeper economic slowdown.
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Those fears roiled trading around the globe, spurring a massive surge in volatility and a flight away from the riskier corners of the market. The S&P 500 saw its worst reaction to jobs data in almost two years. A plunge in key technology companies sent the Nasdaq 100 down over 10% from its peak, passing the threshold that meets the definition of a correction. A rally in Treasuries extended into a seventh straight day, with traders projecting the Fed will cut rates by more than a full percentage point in 2024.
The rout in equities follows a torrid advance partly driven by bets on a “soft economic landing” that would keep driving Corporate America. While the Fed has been able to successfully bring down inflation, the latest jobs figures may give officials some reason to believe their policies are cooling the labor market too much.
“Bad news is no longer good news for stocks,” said John Lynch at Comerica Wealth Management. “Of course, we’re in a period of seasonal weakness, but sentiment is fragile given economic, political, and geopolitical developments. Pressure will escalate on the Federal Reserve.”
Wall Street giants like Citigroup Inc. and JPMorgan Chase & Co. are now calling for more aggressive Fed action. Speaking on Bloomberg Television, Chicago Fed President Austan Goolsbee said officials won’t overreact to any one piece of data, echoing comments by Jerome Powell on Wednesday.
“The Fed almost always waits too long to cut rates,” said Matt Maley at Miller Tabak + Co. “Then, as investors come to realize that the rate cuts are coming more due to a slowdown in growth — rather than a drop in inflation — the situation on the stock market tends to get ugly.”
The S&P 500 slid 1.8%. The Nasdaq 100 sank 2.4%. The Russell 2000 tumbled 3.5%. Wall Street’s “fear gauge” — the VIX — hit the highest since March 2023. Intel Corp. plunged 26% on a grim growth forecast. Treasury 10-year yields slipped 18 basis points to 3.8%. The dollar fell 0.7%.
“Oh dear, has the Fed made a policy mistake?” said Seema Shah at Principal Asset Management. “The labor market’s slowdown is now materializing with more clarity. A September rate cut is in the bag and the Fed will be hoping that they haven’t, once again, been too slow to act.”
To Scott Wren at Wells Fargo Investment Institute, markets have turned attention from “when and how much will the Fed ease” to a mindset of “growth looks like it is plunging and the Fed is behind the curve.”
“After the big equity run higher, investors are taking money off the table and booking profits,” Wren said. “Expect the near-term volatility to continue.”
Nonfarm payrolls rose by 114,000 — one of the weakest prints since the pandemic — and job growth was revised lower in the prior two months. The unemployment rate unexpectedly climbed for a fourth month to 4.3%, triggering a closely watched recession indicator.
How much should investors worry about a slowdown?
“This marks an official ‘growth scare’ and one that the Fed will have to pay close attention to,” said George Mateyo at Key Wealth. “To be true, the economy is still expanding and jobs are still being added, so calls that a recession is upon us are overstated in our view. But the economic environment is changing quickly and the Fed should be attentive to downside risks.”
“The big question is: are we sliding right into a recession? Or is the economy simply hitting a rough spot?” said Ryan Detrick at Carson Group. “We’d side with we will still avoid a recession — but the risks are rising.”
At Evercore, Krishna Guha says he doesn’t think the evidence overall suggests the labor market is “cracking” — but it is clearly softening and may weaken further — so there is “ample cause for the Fed to pull forward cuts.”
To Lara Castleton at Janus Henderson Investors, the “soft landing narrative” is now shifting to “worries about a hard landing.” While fears of a policy mistake are rising, she thinks one negative miss shouldn’t lead to overreaction given that other data points that still show economic resilience.
“Equities selling off should be seen as a normal reaction, especially considering the high valuations in many pockets of the market,” she said. “It’s a good reminder for investors to focus on the earnings of companies going forward.”
With just three meetings left, swap pricing reflects the growing perception that the Fed will need to make an unusually large half-point move at one of the gatherings or act between its scheduled meetings — moving rapidly to bolster growth.
Still, large policy moves with an aggressive response could imply an emergency, triggering even more jitters among traders.
To Chris Low at FHN Financial, the market is “probably right” to think the Fed should cut by 50 basis points, but psychology is as important as data at turning points.
“FOMC participants are more likely to take it slowly with a quarter-point cut at first, if for no other reason than to project calm and control,” he said.
“From a Fed perspective, this does not translate into making hasty policy decisions, but it should help them remove the rose-tinted glasses when assessing policy decisions at the next meeting,” said Charlie Ripley at Allianz Investment Management.
Stocks are likely to fall when the Fed delivers its first rate cut because the pivot will come as data signal a hard — rather than soft — landing for the US economy, according to Bank of America Corp.’s Michael Hartnett.
In the history of the start to Fed easing since 1970, cuts in response to a downturn have proved negative for stocks and positive for bonds, the BofA strategist wrote in a note, citing seven examples that demonstrated this pattern. “One very important difference in 2024 is extreme degree to which risk assets have front-run Fed cuts,” Hartnett said.
Some of the main moves in markets:
Stocks
The S&P 500 fell 1.8% as of 4 p.m. New York time
The Nasdaq 100 fell 2.4%
The Dow Jones Industrial Average fell 1.5%
The MSCI World Index fell 2%
The Russell 2000 Index fell 3.5%
Currencies
The Bloomberg Dollar Spot Index fell 0.7%
The euro rose 1.1% to $1.0912
The British pound rose 0.5% to $1.2809
The Japanese yen rose 1.9% to 146.59 per dollar
Cryptocurrencies
Bitcoin fell 3.2% to $62,592.26
Ether fell 4.9% to $3,011.61
Bonds
The yield on 10-year Treasuries declined 18 basis points to 3.80%
Germany’s 10-year yield declined seven basis points to 2.17%
Britain’s 10-year yield declined five basis points to 3.83%
Commodities
West Texas Intermediate crude fell 3.1% to $73.97 a barrel
Spot gold fell 0.4% to $2,436.77 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Andre Janse van Vuuren, Lynn Thomasson and Lu Wang.
The Federal Reserve’s goal is to get the inflation rate at least near 2% before it begins cutting interest rates.
That’s a formal target backed by written policy, but it’s also the source of growing liberal discontent serving as another form of political pressure on Fed Chair Jerome Powell as he tries to navigate a white-hot election year.
Some on the left want that number to be higher. Some would prefer the Fed add a second target focused on the labor market. And several Democrats used public hearings this past week with Powell to question the target’s origins and why it has so much importance inside the central bank.
“It seems to come from Auckland and from the 1980s” a somewhat disbelieving Rep. Brad Sherman said Wednesday when it was his turn to question Powell.
The liberal stalwart from California was right. The path to 2% began with an off-the-cuff comment in New Zealand in 1988.
The Fed publicly adopted the standard 24 years later, in 2012, in a process that was met with discomfort from the left side of the political spectrum largely because of the lack of a parallel labor market target.
Senator Sherrod Brown, chairman of the Senate Banking Committee, underlined this dynamic Thursday when he suggested Powell move quickly to cut rates “to prevent workers from losing their jobs” and added that “this town too often seems to forget that maximum employment is part of the Fed’s dual mandate.”
The Fed doesn’t have a numeric labor target even though its dual mandate requires it to aim for both stable prices and maximum employment.
Its inflation target is key because of how rate cuts are decided. Powell and other Fed officials have made it clear they won’t start lowering the benchmark rate from its 22-year high until they are confident inflation is moving down “sustainably” to 2%.
And Powell strongly signaled this week that the 2% inflation target isn’t going anywhere. He mentioned it seven different times within the span of his five-minute-long opening remarks before lawmakers on both Wednesday and Thursday.
He also acknowledged its Kiwi origins in response to Sherman’s questioning but added that “2% has become the global standard, it’s a pretty durable standard.” He reinforced his belief that it wouldn’t be a problem for the US to achieve the 2% level in the months ahead.
“People are always talking about this,” said Preston Mui, who is with a labor market-focused group called Employ America. Changing the target by moving it even higher to 3% “is probably not something that’s politically in the cards for the Fed at all right now.”
But talking about the number has nonetheless “caused a lot of headaches for Powell over the last two to three years,” Mui added.
How the Fed got here
The path to the Fed’s 2% inflation target was a winding one that began with an interview that is now infamous in central banking circles.
Don Brash, who was governor of New Zealand’s Reserve Bank, offered an off-the-cuff comment in 1988 that he wanted an inflation rate between 0 and 1%. That set off a policy-making process and led his nation to adopt a formal 2% target soon thereafter.
Other central banks followed and the moves were criticized from some quarters as being too inflation-focused.
Perhaps the most colorful takedown came from Mervyn King, a British economist who served as governor of the Bank of England. He said in 1997 that he worried a hyper-focus on price targets would lead to central bankers becoming “inflation nutters.”
Don Brash, then the governor of the Reserve Bank Of New Zealand, during a press conference. (Robert Patterson/Getty Images) (Robert Patterson via Getty Images)
The Federal Reserve, under Alan Greenspan at the time, was resistant to a public embrace of the idea but debated it throughout the 1990s and early 2000s.
“If you read FOMC transcripts around inflation targeting it’s a concern,” said Federal Reserve historian Sarah Binder of political considerations in a recent interview.
There was resistance to implementing it during a 2008 downturn, with Ben Bernanke in charge. There was concern among Fed governors that “we’ve got to be worried about pushback from Democrats,” Binder said.
But by 2012, with a recession in the rearview mirror and Bernanke in his second term as chair, the Fed pivoted and a 2% target was publicly adopted.
Bernanke argued in his memoir that a 2% target increases business and consumer confidence and therefore gives the bank more flexibility to address both sides of its dual mandate.
It’s an argument that is still used today, with an explainer on the Fed’s website saying the 2% target “is most consistent with the Federal Reserve’s mandate for maximum employment and price stability.”
But many on the left were never fully on board. Bernanke acknowledged in his memoir that a main liberal voice of that era — Rep. Barney Frank of Massachusetts — brought up the lack of parallel labor market target and “wasn’t completely comfortable” with the policy even if he went along with it in the end.
Rakeen Mabud, the chief economist at the left-leaning group Groundwork Collaborative, put a finer point on it, saying the target “codifies the fact that inflation is just more important to the Fed than unemployment is.”
The ongoing critique is further contextualized by a 2020 move at the Fed to adopt a flexible average inflation targeting framework. In effect, the change made 2% into a less rigid target by allowing the Fed to look at 2% as an average and allows inflation to run slightly hotter for stretches.
The policy will be under review, Powell said this week, beginning later this year and through the end of 2025.
Why it won’t be so easy to change
The 2% target could grow as an issue in the months ahead, with many Democrats continuing to call for rate cuts even as forecasts have dropped throughout the early months of 2024. Some in the financial world are even predicting zero cuts all year.
“Interest rates are too damn high,” Congresswoman Ayanna Pressley of Massachusetts told Powell.
Another issue for the left is that simply adding a corollary target focused on the unemployment rate — which ticked up to 3.9% in the February jobs report — is not necessarily as easy as it might sound.
Mui, the senior economist at Employ America, said his group is focused on more nuanced measures like the prime age employment rate — the number of younger people working against their overall population — or wage growth or quit rates or overall labor force participation.
“I think if there was this rigid commitment to defining an unemployment target, there’s actually a risk [in some scenarios] that it actually doesn’t pay enough attention to that side of their mandate,” he says.
Ben Werschkul is Washington correspondent for Yahoo Finance.
The streaming wars have reached a fever pitch with more ads, higher prices, and greater competition as platforms scramble to reach profitability and capture paying users.
With so many choices now available to consumers, the media landscape seems to be reverting to the cable TV bundle of years past — the very thing that streaming set out to undo.
On Monday, telecom giant Verizon (VZ) announced it will offer a $10 bundle for the ad-supported plans of both Netflix (NFLX) and Warner Bros. Discovery’s Max (WBD) streaming services, yielding more than 40% in savings.
The offer, available for Verizon’s myPlan customers, will begin on Thursday. The company will also offer an additional bundle that combines the ad-free Disney+ plan along with the ad-supported tiers of Hulu, ESPN+, Netflix, and Max for $20 a month.
The news comes after The Wall Street Journal reported Friday that Paramount Global (PARA) and Apple (AAPL) are in early-stage talks to bundle their streaming services at a discount. Paramount declined to comment while Apple did not respond to Yahoo Finance’s request.
The concept of bundling isn’t new. Companies in the space have recently been doing it with their own services. Apple for instance offers Apple One, which combines Apple TV+ with other services like Apple Music and Apple Arcade. The bundle launched globally in late 2020.
On Wednesday, Disney, which also has been offering a bundle with Disney+, Hulu, and ESPN+, officially began its domestic rollout of a one-app experience that incorporates Hulu content via Disney+ — a similar play to Paramount’s Showtime combination as well as the integration of HBO Max and Discovery+, which both merged their respective services earlier this year.
There have also been third-party bundles, with the ad-supported Paramount+ plan automatically offered to Walmart+ members. Meanwhile, customers of Instacart+ receive Peacock’s ad-supported plan at no additional cost. Paramount also struck a partnership with Delta earlier this year.
“Everybody’s trying to come up with something proprietary,” Mark Boidman, partner and global head of media at Solomon Partners, told Yahoo Finance of the bundle. “When you can bundle something together at an attractive price in the minds of consumers then that makes sense.”
Former Kroger employees who left the company have been getting some surprising texts and emails. The supermarket operator—the nation’s largest by sales—wants them back, and it isn’t being shy about reaching out and letting them know.
That is not generally the way things work, of course. Once you leave a company, chances are slim it will reach out later asking you to return. You might have left your boss in a lurch, for one thing. But the lowest unemployment rate in 53 years means companies are getting creative about filling open positions.
“Alumni are also a talent source,” Tim Massa, chief people officer at the grocer, told the Wall Street Journal. According to him, the Cincinnati-based company has tried hard since the pandemic ended to stay in touch with ex-employees and has seen a significant number of them return.
For instance, the company persuaded Tish Spurlock, a former recruiter at Kroger, to come back after reaching out to her, the Journal reported. Spurlock had left for a technology firm but returned to Kroger in a new role with a higher salary.
Associated Wholesale Grocers meanwhile has reached out to ex-employees through LinkedIn and Facebook, according to the Journal. The company got more aggressive with rehiring after seeing how well it worked—returning workers generally hit their targets months before new ones do.
Of course, fears of a looming recession remain, credit card debt in the U.S. is rising while savings dwindle amid high inflation, and headlines about mass layoffs at big-name companies have been inescapable in recent months. But those layoffs have often been concentrated in the tech industry, where many companies overhired to meet surging demand during the pandemic.
Across the U.S. economy, many workers who left their jobs during the Great Resignation ended up with higher salaries at new jobs. Understaffed employers, meanwhile, have felt compelled to boost salaries or offer higher ones to lure in new talent.
Or in the case of Kroger and others, reach out to workers who quit.
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