The weakest job market since 2011 is more and more being framed not as a glitch, however as the brand new regular—one the place development roars and jobs barely transfer, leaving a technology asking, “Dude, the place’s my job?”
Financial institution of America Analysis’s “State of affairs Room” be aware warned in mid-December that markets are priced for a strong 2026 at the same time as hiring stalls and unemployment rises and recalled a now 25-year-old cult basic stoner comedy starring Ashton Kutcher and Seann William Scott to make its level.
The entry-level employee can be forgiven, in different phrases, for feeling in regards to the job search the way in which Kutcher and Scott really feel about their stolen wheels. (The screenwriter feels equally in regards to the show-business labor market, telling The Hollywood Reporter a number of weeks in the past that he’d stop to turn into a therapist.)
”The job market has been weak this yr,” wrote BofA’s Yuri Seliger and Sohyun Marie Lee, commenting on the double payrolls report exhibiting weak job development in October and November. “A scarcity of restoration within the jobs market and a slower U.S. financial system are key dangers to observe for 2026.”
Seliger and Lee flagged what it referred to as the weakest U.S. job market since a minimum of 2011 (with the notable exception of the mass layoff wave from Covid), with month-to-month payrolls averaging simply 17,000 over the previous six months—by far the slowest tempo of job creation for the reason that world monetary disaster. Personal payrolls are solely modestly stronger at 44,000 on a six‑month common foundation, nonetheless at their weakest degree in nicely over a decade, whereas broader U‑6 underemployment has climbed to eight.7% and job openings per unemployed employee have slumped to 1.0, each the softest since 2017.
But the State of affairs Room group additionally famous that credit score spreads stay close to cyclical tights and shares close to document highs, signaling that traders are nonetheless betting on a robust enlargement in 2026. “A powerful U.S. financial system is probably going not appropriate with the absence of job development,” they warning, warning that the dearth of a labor‑market restoration is now one of many central dangers to that bullish market narrative. The surprisingly robust GDP quantity for the third quarter, revealed after the BofA be aware was written, added new gas to the fires of this argument.
Ok‑formed development with lacking jobs
The headline development quantity was eye‑catching: within the third quarter, U.S. GDP grew at a 4.3% annual charge, powered by a client spending surge and a $166 billion soar in company earnings. However actual disposable earnings was flat—actually 0% development—which means households didn’t acquire buying energy and as an alternative relied on financial savings, credit score, and value‑reducing to maintain spending, particularly on unavoidable objects like healthcare and childcare.
Companies, she argued, have realized learn how to develop with out hiring, squeezing extra output from lean groups fairly than increasing payrolls to satisfy demand—a sample that aligns with BofA’s proof of traditionally weak payroll positive factors in an in any other case strong macro backdrop. “We’re seeing a lot of the productiveness positive factors we’re seeing proper now as actually simply the residual of firms being hesitant to rent and doing extra with much less,” Swonk informed Fortune. “Not essentially AI but.”
Her evaluation aligned with what BofA’s Savita Subramanian informed Fortune in August a few “sea change” in employee productiveness, as firms changed folks with course of. Corporations had realized learn how to “to do extra with fewer folks” after the inflation that adopted the pandemic, and he or she predicted this can be a optimistic for shares: “A course of is nearly free and it’s replicable for eternity.”
Goldman’s ‘jobless development’ and Gen Z
Extra darkly, Goldman Sachs economists warned in regards to the prospect of “jobless development.” In an October be aware, Goldman economists David Mericle and Pierfrancesco Mei discovered that outdoors of healthcare, internet job creation turned weak, zero, or detrimental in lots of sectors at the same time as output retains rising, with executives more and more targeted on utilizing AI to scale back labor prices—a “probably lengthy‑lasting headwind to labor demand.”
They argued that the modest job positive factors alongside sturdy GDP seen lately are “more likely to be regular to some extent within the years forward,” with most development coming from productiveness—particularly AI—whereas getting older demographics and decrease immigration restrict labor‑provide contributions.
Apollo’s Torsten Slok identified in a December be aware that demographic change is now changing into seen: the variety of households with youngsters beneath 18 peaked at round 37 million in 2007 and has declined to roughly 33 million as of 2024, reflecting decrease beginning charges and an getting older inhabitants, regardless of total inhabitants development persevering with.
A fragile equilibrium
Each BofA and Goldman cease in need of predicting mass unemployment, however neither sees a straightforward path again to the outdated playbook the place robust GDP reliably meant plentiful new jobs. Nonetheless, Goldman sees a bigger shakeout for the financial system: “Historical past additionally means that the total penalties of AI for the labor market may not turn into obvious till a recession hits,” Mericle and Mei wrote in October.
Within the meantime, the mid‑2020s labor market could stay outlined much less by layoffs than by shortage of alternative—particularly for Gen Z—an period of job hugging on the high and job looking in useless on the backside. Seen in gentle of the GDP figures and the prospect of jobless development over the horizon, BofA’s glib, throwback query could solely turn into extra urgent within the new yr: the place are the roles?
