What is the impact of AI adoption on the U.S. job market?

Economists predict that as businesses invest heavily in productivity-enhancing technology like AI, they will be poised to shed labor, leading to an increase in layoffs and a rise in unemployment in 2026.

How is the Federal Reserve responding to the changing job market dynamics?

According to the article, the Federal Reserve lacks the tools to address the structural changes in the job market, which are driven by factors like AI adoption and immigration policies. The Fed is not well positioned to prevent the slowdown of the labor market with rate cuts.

What is the outlook for the U.S. job market in 2026?

The article states that 2026 is likely to be a year of "low-hire, more-fire" as businesses prioritize efficiency and productivity over hiring, leading to an increase in layoffs and rising unemployment.

Home / Business and Economy / Layoffs Loom as Businesses Prioritize Productivity Over Hiring

Layoffs Loom as Businesses Prioritize Productivity Over Hiring

11 Nov

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Summary

Economists warn of rising unemployment in 2026
Businesses investing in productivity-enhancing tech to shed labor
Federal Reserve lacks tools to address structural job market issues

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.