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Happy Sunday, Crew!

Let’s talk about the U.S. labor market real quick.

With the official jobs report on hold during the shutdown, the picture comes from private sources that rarely line up. Announced layoffs have jumped, a payroll proxy shows a small gain, and unemployment claims are still low by history but drifting higher. Read together, that says cooling, not collapse.

A lot of the confusion is timing. Layoff tallies you see now are mostly announcements, often tied to year-end budget setting, and many are scheduled over several months. Weekly claims capture people who actually lost jobs and filed. It is normal for the announcement pipeline to swell before the flow shows up.

Hiring has slowed rather than stopped. Wage growth looks flatter than a year ago. That matches what managers are doing on the margins: fewer postings, slower backfilling, tighter compensation reviews.

Inside firms there is a spot versus contract problem. Pay bands moved up fast in 2021 and 2022 to win talent. Today the going rate to refill a seat can be lower than what an incumbent earns. If revenue is soft, the math favors attrition, restructurings, and targeted reductions to reset costs and reopen entry paths at current rates. That can lift the headlines without an immediate spike in claims.

AI is showing up more as a budget reallocation than a broad job killer. Companies feel pressure to fund data work, tooling, and pilots. Those dollars often come from thinning support roles and middle layers. Savings arrive quickly. Productivity benefits take longer.

Demographics and immigration set a lower breakeven for monthly job gains than before 2020. Small positive prints can keep the unemployment rate steady for a while, but a stall in hiring paired with the announced cuts turning real would nudge it up. Holiday hiring plans also look more cautious, which will make the year-end read noisy when the official data returns.

So where are we. Somewhere between a late-cycle slowdown and a soft landing with speed bumps. Demand-sensitive categories look softer. Consumers are more price sensitive, and that squeeze is moving up the income ladder. Firms that leaned on price during the inflation spike have less room to do so now, so they are working the cost side harder.

The Fed will read this through the dual mandate. If wage growth stays flat to cooling and the unemployment rate nudges up when the official series resumes, that supports the view that underlying inflation pressure is easing. The transmission from rates to housing and hiring has been uneven this cycle, and revisions will be messy. The first clean read we get in early 2026 may force a rewrite of part of the 2025 story. It has been that kind of year.