The US job market harbors hidden concerns, experts warn that growth momentum may be difficult to sustain

The Zhitong Finance App learned that despite the latest economic data showing that the US job market remains stable, Appcast chief economist Andrew Flowers warned that the employment base is experiencing a “rift” and that the next few months may pose a major challenge to the labor market.

According to data released by the US Bureau of Labor Statistics, the US added 139,000 new jobs in May, slightly higher than market expectations and slightly lower than the 147,000 jobs in April. The unemployment rate remained at 4.2%, while the “part-time job but want to work full time” ratio, which represents underemployment, remained unchanged at 7.8%.

However, Flowers notes that overall, the US job market is actually “barely maintaining the status quo.” He pointed out that in the past year, the average number of new jobs added in the US was only 144,000 per month, which is the lowest level since 2011.

The three major industries support employment but face policy crackdowns

Currently, most of the new jobs are being added in the healthcare, leisure and hospitality industries, and social assistance industries. Although these industries have always been the backbone of employment, Flowers warned that tariffs and health-care related policies in the spending bill being promoted by the Trump administration could limit the room for growth in these industries.

The spending bill has been passed in the House of Representatives and is currently being reviewed by the Senate. The content includes cutting federal Medicaid spending by $700 billion and raising the threshold and cost of enrolling in health insurance through the “Affordable Care Act” (ACA) market.

“The medical industry has contributed about 30% of new employment in the past three years. If capital is cut, it is tantamount to 'killing the goose that lays the golden egg'.” According to Flowers, the healthcare industry is almost the only stable engine that currently drives employment.

At the same time, the leisure and hospitality industry is also threatened by the new tariff policy. Businesses may pass costs on to consumers, leading to a decline in consumer spending, which affects employment.

He also pointed out that job growth in the warehousing and retail industry has begun to slow down, which is one of the main sources of employment growth in April. “Future employment growth seems to be all weighed down in the healthcare industry basket.”

Fresh graduates and entry-level jobs are being impacted by the decline in employment confidence

Jobseekers' confidence is waning. According to the latest data from the recruitment platform ZipRecruiter, about 40% of job seekers lack confidence in the current number of jobs, and nearly one-third expect employment opportunities to be further reduced in the next six months.

“The current job market is a differentiated pattern of 'insiders and outsiders. '” Flowers said, “If you already have a job, that's not bad.” The unemployment rate remains stable, the number of layoffs is low, and wage growth remains resilient.

However, for those looking for work, the situation is not optimistic, especially for those who have just graduated from high school or college. “It's getting harder to find a job.” he said.

He pointed out that the growth of knowledge-based jobs such as finance, marketing, sales, and software development is very weak, while jobs are being cut in the professional and business services industries.

Flowers said, “We've been telling young people for decades to 'go to college, 'and they did the same. But now the jobs they want, whether in technology, marketing, banking, or government jobs, are all the weakest fields. We are at a turning point where it will be harder for young people to get the jobs they want, while blue-collar jobs will become harder and harder to fill.”

Federal Reserve Report: Economic Activity Slows Down, Businesses and Households Tend to Be Cautious

The latest “Beige Book” released by the Federal Reserve further confirms this view. The report indicates that the overall US economy has shown a contraction trend in the past six weeks. “All regions reflect a high level of economic and policy uncertainty, which causes businesses and households to be more hesitant and cautious in making decisions,” the report said.

The report also pointed out that recruitment is “basically flat,” and in some regions, employee turnover rates are still low even though the number of candidates has risen, indicating that companies are still cautious about adding jobs.