The unemployment rate rose from 4.4% in September to 4.6% in November. The US Bureau of Labor Statistics did not conduct its household survey in October due to the government shutdown. The household survey includes the unemployment rate.
The rise from the cyclical low of 3.4% to about 4% occurred as workers gradually returned to the labor force following the pandemic, easing labor shortages at the time. The surge in immigration may also have played a role, as more individuals searched for work.
However, since the beginning of the year, the jobless rate has risen from 4.0% to 4.6%, and the rate is up in four of the last five months. By itself, that would signal a recession has likely begun.
But let’s take a closer look: So far this year, the labor force has grown by 827,000 to 171.6 million, while the number of those employed has declined by 154,000 to 163.7 million, according to the household survey.
Since the number of unemployed is up since the beginning of the year the unemployment rate has risen from 4.0% in January to 4.6% in November.
The US BLS roughly defines the labor force as those who are working + the unemployed (not working AND actively looking for work).
Unemployment is climbing partly because job growth isn’t keeping pace with the influx of new workers. The labor force would be expected to rise over time as the population increases.
AI’s impact on hiring, firing
The soft labor market is being blamed on AI, which is reducing the need for workers, at least according to some folks. But is this really the case? Well, it’s not easily quantified.
We’re still in the early stages of AI, and companies still haven’t quite figured out how to fully utilize the new technology.
Still, AI-proficient employees may be viewed as more productive and more creative.
In turn, creativity, which drives innovation, may help generate new sales. AI’s early footprint could result in modest hiring, rather than large job losses.
Another view: AI is a payroll “dampener,” not a destroyer. It raises productivity and shifts tasks, which together slow broad payroll growth without causing large, immediate job losses.
Perhaps tariff uncertainty and somewhat elevated interest rates, along with the desire to stay efficient, may also be affecting employment in today’s uncertain environment. Additionally, the hiring binge that occurred when the economy reopened may be creating a lull in hiring today.
Companies loaded up on employees a couple of years ago and may now be putting the brakes on hiring.
Even so, these observations may provide little reassurance for individuals facing the realities of today’s job market.
A SMALL FEAT
The small-cap Russell 2000® Index reached a new all-time high on 12/10 after gaining 11% since 11/20 — more than double the large-cap S&P 500’s 5.3% gain. About 60% of stocks in the Russell 2000® Index with positive earnings are up 14% year-todate, while the roughly 40% of stocks that are unprofitable are up 24%.(Source: Bloomberg)
NOT EVERYTHING COSTS MORE
More than 7 in 10 Americans (71%) said they’re spending more on groceries this year, while 63% said tariffs are causing higher inflation in the US. 59% said they’re spending more on Utilities,but fewer than half said they’re spending more on health care (43%), housing (39%) and gasoline (37%). (Source: ABC News)
GREASING THE GEARS
Since 1984, when crude oil has traded within 1% of a 52-week low and the S&P 500 traded within 1% of a 52-week high, as they did on 12/11, the S&P 500’s average performance over the following year was a gain of 16.7% with gains occurring 91% of the time. (Source: Bespoke)
A SILVER YEAR
Silver’s 110% gain in 2025 ranks as its second-best year since at least 1976, trailing only the 373.4% gain in 1979, when the Hunt brothers attempted to corner the market. The only other year when silver rallied more than 50% was 2010, when it gained 83.7%. (Source: Bespoke)