The U.S. economy is still booming. Layoffs haven’t spiked. The stock market continues to climb. And yet, when a fresh batch of labor market data landed Tuesday, one of the country’s most respected economists said it made her stomach drop.
“It’s gut-wrenching,” Diane Swonk, chief economist at KPMG, told Fortune. “We’re growing, but we can’t generate jobs.”
“Rock bottom” hiring
Two releases—the November Job Openings and Labor Turnover Survey (JOLTS) from the U.S. Bureau of Labor Statistics and December’s private-payroll report from ADP—tell the same story from different vantage points. Hiring demand is cooling fast, and worker movement has frozen, yet employers are also still reluctant to cut staff. The result is a labor market stuck in a strange, late-cycle equilibrium that Swonk said looks nothing like past expansions.
Start with JOLTS, the Job Openings and Labor Turnover Survey, which, as official government data, holds more water with economists than the private ADP data. Job openings fell to about 7.1 million in November, down sharply from October and nearly 900,000 lower than a year earlier. The “quit rate,” which serves as the ultimate barometer for worker confidence and the ability to climb the career ladder, remained stagnant at 2.0% in November (Swonk said she was shocked by this number in particular). Economists haven’t seen this level of inertia since January 2014, a period when the country was still clawing its way out of the Great Recession.
In a healthy economy, people quit for better-paying roles, driving wage growth for everyone. Today, however, workers are “clinging on” to the jobs they have out of sheer fear, Swonk said. This lack of movement has created a kind of mobility trap where the natural path to a middle-class raise has essentially vanished. While ADP data shows that “job-changers” saw pay growth accelerate to 6.6% in December, Swonk argues this is a statistical distortion. This “switching premium” is increasingly reserved for a tiny elite of specialized AI talent, while the average worker finds that the premium for job-hopping has evaporated, causing attrition rates to plummet and companies to freeze hiring.
This “frozen” state is further evidenced by what ZipRecruiter Chief Economist Nicole Bachaud wrote in a note was a “series low” in “other separations,” which economists usually interpret to mean retirements and transfers. These fell to just 232,000 in November. “Older workers are increasingly remaining in the labor market for longer,” Bachaud wrote, a trend driven both by rising life expectancy and “increased pressure on retirement savings due to affordability concerns.” It suggests potential economic hardship, as workers feel compelled to extend their careers. In other words, many boomers can’t enjoy their golden years in this economy.
People aren’t retiring, they aren’t moving, and they aren’t quitting. The labor market has (un)settled into an odd disequilibrium where hiring is at “rock-bottom” levels, as Samuel Tombs, chief economist from Pantheon Macroeconomics, wrote, but layoffs also remain low because companies are hoarding the workers they already have.
Economists say the explanation lies in a mix of post-pandemic caution and lingering labor scarcity. After years of companies on the backfoot during the “Great Resignation,” many appear determined not to let go of the people they have, even as they quietly stop adding new ones.
“We had overstaffing in the wake of the pandemic, so I see it as a bit of a hangover from the surge [of hiring] as the economy reopened and everything went crazy,” Swonk said.
The widening wage gap
Fresh data from the Bank of America Institute provides a vivid look at how this stagnation is hurting different income groups differently, showing a “pronounced gap” in the wage growth experience. In December, higher-income households saw after-tax wage growth of 3.0%, while middle-income growth dropped to just 1.5%—its lowest point since May 2024. For lower-income households, the situation is even tighter at 1.1%.
With inflation still persistent, this means middle- and lower-income families are effectively seeing negative real wage growth. They are working in an economy that is expanding on the charts, but feeling poorer with every paycheck. This “K-shaped” divergence is fueling a spending divide where affluent households keep the economy “booming” through high-end travel and services, while the bottom 80% struggle to make ends meet.
This economic fracturing is taking a physical toll on certain parts of the country. The December ADP report revealed what, if the data is accurate, would be a massive localized crisis: the West region shed 61,000 jobs in a single month. This collapse was driven by the tech and professional sectors in the Pacific sub-region, which lost 59,000 positions. Swonk points to this as evidence of “jobless growth,” where firms are leveraging efficiency to “do more with less”. While some analysts from Oxford Economics argue the AI-driven shakeup is still “patchy,” Swonk notes that companies are aggressively cutting the white-collar support roles and middle-management positions that were once the bedrock of the middle class.
Whether those cuts reflect genuine productivity gains from AI—or simply a belated correction after post-pandemic overhiring—is still unclear, Swonk said.
The fragile one-legged stool and a faint silver lining
Perhaps most concerning for experts is how narrow the base of our economic growth has become. For much of late 2025, the labor market was propped up by a single sector: Education and Health Services, which added 39,000 jobs in December. Swonk refers to this as a “one-legged stool” that is finally starting to buckle, especially as childcare subsidies freeze and the public sector broadly faces margin compression from tariffs.
Amidst this worrisome news, analysts are searching for a floor. BoFA notes that while the market is in a “low-hire, low-fire” mode, a slight rebound in their payroll estimate in December may suggest that “the worst of the slowdown is behind us.” Their report suggests it is possible that the labor market slowdown has “run its course” and that the deceleration in lower-income wage growth has finally leveled out.
However, the outlook for the rest of 2026 remains subdued. Jeffrey Roach, Chief Economist for LPL Financial, wrote that he expects monthly private payroll growth to stabilize at a meager 50,000 for most of the year. He said he was optimistic that private payroll growth may have “bottomed out,” but his chart spoke volumes about the precipitous decline in hiring.
While a temporary “sugar high” from tax refunds and minimum wage bumps in 19 states might provide a short-term lift to spending, Swonk said the relief will be short-lived. The economy, as it is, is incredibly vulnerable to a market correction.
“If you have anything that is a negative shock that hits the top 20%, you take down consumer spending pretty quickly,” Swonk said. “And that’s two-thirds of the economy.”
The wife of Renee Good, the woman shot and killed in her car by a federal immigration agent in Minneapolis, says the couple had stopped to support their neighbors on the day of the shooting and described the mother of three as leaving a legacy of kindness.
“We had whistles. They had guns,” Becca Good said in a written statement Friday that was provided to Minnesota Public Radio.
The statement was her first public comment about the death of Renee Good, 37, who was killed Wednesday after three Immigration and Customs Enforcement officers surrounded her Honda Pilot SUV on a snowy street a few blocks from the couple’s home. Video taken by bystanders show an officer approaching the SUV stopped across the middle of the road, demanding the driver open the door and grabbing the handle.
The vehicle begins to pull forward and a different ICE officer standing in front of it pulls his weapon and immediately fires at least two shots at close range, jumping back as the vehicle moves toward him.
Trump administration officials have painted Renee Good as a domestic terrorist who tried to run over an officer with her vehicle. State and local officials in Minneapolis, as well as protesters, have rejected that characterization.
Becca Good has not responded to calls and messages from The Associated Press. Her statement provided no further detail about the day of the shooting and instead focused on memorializing her wife.
The couple had only recently moved to Minneapolis and were raising Renee Good’s 6-year-old son from a previous marriage.
Becca said Renee was a Christian who “knew that all religions teach the same essential truth: we are here to love each other, care for each other, and keep each other safe and whole.”
She thanked the people all across America and the world who had reached out in support of their family.
“Renee sparkled. She literally sparkled,” Becca Good wrote. “I mean, she didn’t wear glitter but I swear she had sparkles coming out of her pores. All the time. You might think it was just my love talking but her family said the same thing. Renee was made of sunshine.”
Far from the worst-of-the-worst criminals President Donald Trump said his immigration crackdown would target, Good was a U.S. citizen born in Colorado who apparently was never charged with anything beyond a single traffic ticket.
In social media accounts, she described herself as a “poet and writer and wife and mom.” She said she was currently “experiencing Minneapolis,” displaying a pride emoji on her Instagram account. A profile picture posted to Pinterest shows her smiling and holding a young child against her cheek, along with posts about tattoos, hairstyles and home decorating.
Her ex-husband, who asked not to be named out of concern for the safety of the two now-teenage children he had with Renee Good while they were married, told the AP on Wednesday that he had never known her to participate in a protest of any kind.
Becca Good said the couple, who had previously lived in Kansas City, Missouri, had settled in Minneapolis after an “extended road trip.” She said people they encountered in the Twin Cities had provided a strong sense that “they were looking out for each other.”
“We were raising our son to believe that no matter where you come from or what you look like, all of us deserve compassion and kindness,” Becca wrote. “I am now left to raise our son and to continue teaching him, as Renee believed, that there are people building a better world for him. That the people who did this had fear and anger in their hearts, and we need to show them a better way.”
Bessent said his agency has launched a series of actions to combat fraud in the state and has launched investigations into four businesses that people use to wire money to family members abroad to do more to scrutinize transactions. He did not name the businesses.
His visit to the state coincides with protests in Minneapolis after an Immigration and Customs Enforcement officer fatally shot a woman in a residential neighborhood south of downtown on Wednesday, leading to a clash between federal and local leaders.
President Donald Trump has targeted the Somali diaspora in the Democratic-led state with immigration enforcement actions and has made a series of disparaging comments about the community, directing Bessent to uncover more fraud. The Treasury first announced last month that it would begin targeting money service businesses, focusing on remittances to Somalia.
The department’s actions have been prompted in part by a series of fraud cases, including a nonprofit called Feeding Our Future accused of stealing coronavirus pandemic aid meant for school meals. Prosecutors have put the losses from that case at $300 million.
Gov. Tim Walz, before he ended his bid to serve a third term this week, said that fraud will not be tolerated in Minnesota and that his administration “will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught.” Walz, who came under heavy criticism from Republicans who said his administration should have caught the Feeding Our Future fraud earlier, said he was “furious” with “criminals that preyed on the system that was meant to feed children.”
The founder of Feeding our Future, Aimee Bock, was charged with multiple counts involving conspiracy, wire fraud and bribery and was convicted in March while maintaining her innocence.
Bessent declined to comment on specific investigations but said he had met with several financial institutions on Friday to ask them to do more to prevent fraud. The department has not disclosed which institutions Bessent spoke with.
Key Treasury actions include Financial Crimes Enforcement Network investigations into Minnesota-based money services businesses, enhanced transaction reporting requirements for international transfers from Hennepin and Ramsey counties, and alerts to financial institutions on identifying fraud tied to child nutrition programs.
“Treasury will deploy all tools to bring an end to this egregious unchecked fraud and hold perpetrators to account,” Bessent told reporters on Friday.
Bessent’s announcement was met with some criticism. Nicholas Anthony, a policy analyst at the libertarian Cato Institute, said Bessent is “building a legacy of financial surveillance and control.”
“The announcement that he is stopping Americans from sending their money abroad and increasing surveillance under the Bank Secrecy Act should be condemned,” Anthony said.
Some Somali leaders said last month they had received anecdotal reports about community members being detained by federal agents but had no details. Those leaders and allies including Walz and Minneapolis Mayor Jacob Frey have vowed to protect the community.
During a speech on Thursday about the Republican Trump administration’s economic agenda at the Economic Club of Minnesota, Bessent referred to the alleged fraud, without mentioning the Somali community that his department is targeting.
“I am here this week to signal the U.S. Treasury’s unwavering commitment to recovering stolen funds, prosecuting fraudulent criminals, preventing scandals like this from ever happening again, and investigating similar schemes state by state,” Bessent said.
Telluride Ski Resort in southwestern Colorado began to reopen Friday after a vote by striking ski patrollers to accept a contract and return to work.
The resort shut down Dec. 27 after the Telluride Professional Ski Patrol Association rejected a company pay proposal. The resort remained closed except for beginner carpets and a lift serving two beginner runs that were staffed this week by managers and temporary ski patrollers.
With help from artificial snowmaking and a foot (30 centimeters) of recent snowfall, more lifts and runs will open starting this weekend, resort officials said in a statement.
“We are confident that this last offer represented a fair compromise,” resort representative Steve Swenson said in the statement.
Neither the resort nor the ski patrol union divulged details of the deal endorsed by the union with a Thursday vote. Negotiations had been ongoing since June.
The union sought pay increases from $21 to $28 an hour for new patrollers and from as little as $30 to almost $50 for the most experienced ones.
“While we are ultimately very disappointed to not address our broken wage structure, we are immensely proud of our efforts that have led to this financial movement. We are even prouder of the recognition and implementation of our supervisors into the unit,” read a union statement on social media Thursday.
Ski patrollers elsewhere in the Rocky Mountain region have been unionizing. Some argue for more pay on the grounds that the cost of living in ski towns is high and that they are responsible for safety.
Patroller duties include attending to injured skiers and the controlled release of avalanches with explosives when nobody is in range.
An almost two-week ski patrol strike a year ago closed many runs and caused long lift lines at Utah’s Park City Mountain Resort. That strike ended when Colorado-based Vail Resorts acceded to demands including a $2-an-hour base pay increase and raises for senior ski patrollers.
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Politics8 years ago