Americans say it's hard to get a job. So why are economists still not worried?

Consumers are feeling the pain of a cooling labor market.

On Tuesday, the latest Consumer Confidence Index release showed a narrow margin between respondents who find jobs “abundant” and those who find jobs “hard to find.”

Stephanie Guichard, senior economist at the Conference Board, told Yahoo Finance that workers who are less confident about the labor market are “not unexpected” given the recent rise in the unemployment rate and the decline in job openings.

But to Guichard, there are few red flags about where the labor market sits today, and consumers are responding to the shift from a “super hot” job market to one that's simply “strong.”

“When you look at the history of the labor market, it's still among the best labor has ever done [markets] We have,” Guichard said. “But consumers are responding to change.”

The latest data undoubtedly showed a labor market that is much cooler than the hot job market of 2022, which has reopened after the pandemic stopped. The unemployment rate rose steadily in 2024 and sat at 4.2%, near the highest level in nearly three years. Meanwhile, the pace of job gains has slowed, with the US economy recording two of the lowest monthly job addition periods since 2024 in July and August.

Job openings in July were at their lowest level since January 2021, while resignations — remember the “letting go?” — is also ticked below. Economists say it marked a shift from the “Great Recession,” in which new jobs and plenty of raises abounded, to the “Great Stay,” in which layoffs didn't increase but fewer people were changing jobs.

Guy Berger, director of economic research at The Burning Glass Institute, a research center that studies labor data, told Yahoo Finance that the declining number of resignations shows that workers are feeling the effects of a weak labor market.

“It's the realization that if they leave their job, it's going to be hard to find a new one,” Berger said.

For now, the Fed seems fine with this situation. Federal Reserve Chair Jerome Powell said in a recent press conference that the labor market is “really solid,” despite the slowdown.

“The US economy is in good shape,” Powell said. “It's growing at a solid pace. Inflation is coming down. The labor market is in a strong place. We want to keep it there. That's what we're doing. [by cutting interest rates]”

Read more: How does the labor market affect inflation?

Economists largely agree that the labor market is showing signs of slowing. But taken at face value, the current situation doesn't seem bad.

As Berger puts it, there's no labor market data that looks “really bad.”

Still, economists like Berger are nervous about what lies ahead. The main concern remains data trends. And most of these data points, Berger says, are going in the wrong direction.

“We're in this slow, ongoing decline,” Berger said. “It's brought us to the point where things have gone from amazing to very good to good to okay, and there's no sign of that stopping anytime soon,” Berger said.

He added, “The reason to be optimistic is that the forces that could ultimately stop this are Fed easing.”

The Fed's interest rate-cutting cycle comes at a critical juncture for the labor market. Of course, some of the data has gotten worse, but mass layoffs are not yet a feature of a labor market slowdown — a key talking point for economists who believe the Fed could be holding off on a so-called “soft landing,” where inflation recedes and the U.S. economy stops slowing. .

After briefly heating up over the summer, new data released Thursday showed weekly jobless claims were at a four-month low in the week ending Sept. 21.

Wells Fargo economist Shannon Seery Grein told Yahoo Finance that rising layoffs are one of the biggest risks to the U.S. economy. Generally, widespread layoffs cause fear and shock among households and often weigh on consumer spending, Grein said.

If costs are low, business growth slows down. And fewer workers are needed as a result of slowing business activity. Then came more layoffs and a more overall slowdown in the economy.

etc.

For now, though, it's not Grain's base case.

“It doesn't look like we're on the brink of massive layoffs,” Green said. “It doesn't seem like the demand supports it. It doesn't seem like businesses are really getting ready to lay off workers when you think about where their profitability is.”

He added: “It looks like we're stalling here, and we have, you know, let some stall out without falling into a recession.”

Josh Schafer is a reporter for Yahoo Finance. Follow him in X @_joshschafer.

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