Job Postings By Industry

Breaking it Down Further

Consumer moods and spending patterns continued to tell somewhat different stories in the first quarter. Measures of household confidence softened further as the quarter progressed, with the University of Michigan’s consumer sentiment index falling to 53.3 in March, one of the weakest readings since inflation peaked mid-2022. Yet the hard spending data remained firmer than sentiment suggested: advance Census estimates show total sales for January through March were up 3.7 percent from the same period in 2025. Consumers still appear uneasy about prices, job prospects, and the broader outlook, but aggregate spending has not deteriorated in a way that would point to a sharp labor-market downturn.

Headline labor-market figures also looked steadier than the underlying flow of hiring. After revisions, payrolls rose by 160,000 in January, fell by 133,000 in February, and rebounded by 178,000 in March, while the unemployment rate stayed in a narrow 4.3 to 4.4 percent range. But beneath that relative unemployment rate stability, hiring conditions became noticeably less dynamic. JOLTS data for February revealed a hires rate of 3.1 percent (lowest since April 2020), and a quits rate of 1.9 percent—consistent with a job market in which workers are less willing or able to switch jobs and employers are filling positions more slowly. In short, the labor market remained intact, but it became more selective and harder to navigate.

That selectivity is also showing up in measures of labor-market distress beneath the unemployment rate. In March, the number of people unemployed for 27 weeks or longer stood at 1.8 million, up 322,000 over the year, and long-term unemployed workers accounted for 25.4 percent of all unemployed people. The labor force participation rate declined to 61.9 percent, the lowest since November 2021. These figures suggest that a growing share of labor-market weakness is taking the form of people remaining disconnected from stable work for longer periods. That dynamic helps explain why confidence has softened even though the headline jobless rate has moved only modestly.

Federal government employment remained one of the clearest drags on overall payroll growth, falling another 18,000 in March and standing 355,000 below its October 2024 peak. Health Care & Social Services, by contrast, remained fundamentally strong but was temporarily distorted by strike activity. This pattern matters because it shows that some of the quarter’s volatility reflected sector-specific disruptions and policy-driven public-sector cuts rather than a generalized collapse in labor demand. Growth is continuing, but it is becoming narrower and more uneven across industries.

The first quarter reinforces the view that the U.S. labor market is entering a cooler, more discriminating phase rather than an abrupt downturn. The Federal Reserve held the federal funds rate at 3.50 to 3.75 percent in March, and its updated projections still showed 2026 unemployment at 4.4 percent and PCE inflation at 2.7 percent—evidence that policymakers continue to see a labor market that is softening, but not breaking. The broader picture is therefore one of controlled deceleration: hiring has slowed, openings have declined, federal job losses are weighing on the totals, and worker confidence has weakened, but consumer spending has so far kept the labor market from slipping into a more severe contraction.

Overall, the first quarter points to a U.S. labor market that is no longer losing jobs, but is also not returning to the broad strength seen earlier in the expansion. Payroll growth improved from the fourth quarter, advertised postings rebounded in several major industries, and consumer spending remained resilient enough to prevent a sharper pullback. Still, lower participation, slower hiring, persistent federal job losses, and rising long-term unemployment suggest that labor-market stability is becoming more uneven. The ongoing conflict with Iran adds another source of uncertainty. Disruptions around the Strait of Hormuz and broader Middle East shipping routes have already raised concerns about energy prices, freight costs, and global supply chains. If those pressures persist, they could filter back into U.S. inflation, business margins, and hiring plans, reinforcing the sense that the economy is moving through a slower and more fragile phase.