Amna Nawaz:
Welcome to the “News Hour.”
The U.S. labor market is showing further signs of cooling, as the latest jobs report shows unemployment rising to 4.6 percent. That’s the highest level in the last four years. There was some good news, as payrolls climbed by 64,000 new jobs last month, better than forecast, but the report also showed a net loss of 105,000 jobs in October. That marks the third time that the economy has shed jobs in the last six months.
Geoff Bennett:
And the biggest losses have been felt at the federal level amid mass firings affecting nearly 168,000 positions over the last two months. The delayed report was due to the six-week government shutdown.
For analysis, we’re joined now by David Wessel, director at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.
Thanks for coming in.
David Wessel, Brookings Institution:
Good to see you.
Geoff Bennett:
So the unemployment rate, as Amna said, is now at 4.6 percent. Is that a meaningful sign of labor market weakening or is this just normal volatility?
David Wessel:
I think it’s a meaningful sign that the labor market is weakening. There’s more than the usual uncertainty this time. I know people are always saying one month doesn’t matter, because the government couldn’t do the usual collecting of data, surveying people during the shutdown, the government shutdown.
But we started the year with unemployment at 4 percent, and now it’s at 4.6. So that’s a sign that the labor market is weakening.
Geoff Bennett:
And you pointed our team to this chart that shows the unemployment rate over the last three years rising steadily. So, in 2023, it was at 3.4 percent as the economy recovered from the pandemic, then was steady at 4.1 in late 2024. Now it’s climbed back to levels we haven’t seen since 2021.
So how do those rates compare in terms of job quality, labor force participation, underemployment?
David Wessel:
Well, we know that labor force participation was up a little bit in the last report.
We know also, interestingly, that there’s a growing number of people who are working part-time who say that they would prefer full-time work. Now that number might be a little messed up by the federal employees. Some of them may have not worked a full week.
So, when you look at all the numbers, the readiness of people to quit their jobs has fallen a lot. That’s a sign that they’re worried about finding jobs. It all points to a labor market that’s weakening, but not falling apart.
Geoff Bennett:
We’re also seeing job gains in health care, but losses in manufacturing and transportation. So what does that mix say about the economy and President Trump’s stated desire to rebuild domestic manufacturing?
David Wessel:
Well, in the good news department, we did see that private sector employment was steady. And it’s actually increased, the pace has increased a little bit since the summer.
Manufacturing, as you point out, continues to lose jobs, despite all the president’s promises to bring it back. I think that has to do — some of it has to do with tariffs. Some of it has to do with automation.
And so what it suggests is that the economy is a little bit — it’s very uneven. Health care, education, social services, they have been strong, but the private sector, manufacturing and other service jobs, have not been.
Geoff Bennett:
And federal employment, as we mentioned, has dropped sharply this year. How much is that weighing on the overall jobs picture?
David Wessel:
Well, we lost 168,000 jobs at the federal level over the last couple of months. Some of that’s because people who got laid off as part of the DOGE campaign were still being paid. And as long as they were being paid, they didn’t count as unemployed. So it all shuts out now.
The number of federal employees is now at the lowest has been for a decade. The White House is bragging about that today. It’s definitely a minus, particularly in the Washington, D.C., area and other places with a lot of concentration of federal employees. But we still created over the last couple of months, two months, about 40,000 jobs.
And that may be enough to keep us close to full employment.
Geoff Bennett:
A number that stands out to me is the long-term unemployment number, people who have been out of work for 27 weeks or more. That number is rising, affects nearly two million Americans, about a quarter of the unemployed.
Why does that matter in particular? And what warning signs does that rise — raise?
David Wessel:
Well, it matters, obviously, because those people are really not just temporarily laid off. They have been off for a while. In human terms, it makes a big difference. Some of them may be running out of unemployment benefits.
It’s one of the panoply of indicators that suggests that, as we see through the fog of the delayed reports, it suggests that the labor market is deteriorating. And that’s why the Federal Reserve cut interest rates last week. And they made a point of, even though they’re above target on inflation, they’re more worried, most of them, about the weakening job market.
Geoff Bennett:
Does it strengthen the case for another cut in January?
David Wessel:
I don’t think that this changes the picture. I think it wasn’t bad enough to cause the Fed to cut rates in January. We will get another jobs report before then. I think they think they have done enough for now, but we will have to see.
Geoff Bennett:
So, taken together, what does this all suggest about the labor market and the health of the economy overall?
David Wessel:
It suggests that the economy is weakening, that the labor market, which is where most of us earn our income, is slowing down. And we don’t know how much more lies ahead, but it is a very worrisome sign.
But as my friend Jason Furman, the former White House — Obama White House economist said, by — even by usual standards, there’s more uncertainty here. And we will have to wait and see another month how bad things are.
Geoff Bennett:
David Wessel, thanks for helping us make sense of all this. We appreciate it.
David Wessel:
You’re welcome.
