Layoffs Loom as Businesses Prioritize Productivity Over Hiring

As of November 11th, 2025, analysts are closely watching the U.S. employment market, which appears to be deteriorating. While official data is lacking, private and alternative sources suggest the job market has not significantly weakened yet. However, economists warn that unemployment remains a key risk to the economy in 2026.

Despite this uncertainty, investors remain optimistic, buoyed by the end of a government shutdown and a potential deal between the U.S. and India. Major stock indexes like the S&P 500, Dow Jones, and Nasdaq have all posted gains, and volatility has decreased.

Yet, the optimism may be short-lived. RSM's chief economist, Joe Brusuelas, warns that the "labor hoarding" that characterized the job market during the COVID-19 pandemic has ended. As businesses invest heavily in productivity-enhancing technology, they are poised to shed labor, leading to an increase in layoffs and a rise in unemployment. Goldman Sachs's chief U.S. economist, David Mericle, echoes this sentiment, noting that the finance giant's layoff tracker is now at a higher level than in 2019.

Brusuelas argues that the Federal Reserve lacks the tools to address these structural changes in the job market, which are driven by factors like AI adoption and immigration policies. He predicts 2026 will be a year of "low-hire, more-fire" as businesses prioritize efficiency and productivity over hiring.