Job Market Stagnation Highlighted Amid Government Shutdown
Recent alternative data, sourced from both public and private entities, indicates that the U.S. job market likely experienced stagnation in September, characterized by persistent sluggish hiring rates.
Surprisingly, economists note that the unemployment rate—a crucial economic indicator—remains uninfluenced despite an observable decline in the number of foreign-born workers.
The latest federal government shutdown, marking the 15th occurrence since 1981 and affecting approximately 750,000 workers, has inevitably delayed the release of vital employment reports.
This includes the anticipated September unemployment figures from the Bureau of Labor Statistics, which are fundamentally significant for Federal Reserve policymakers.
They are scheduled to convene in less than four weeks to deliberate potential interest rate cuts.
Moreover, the shutdown has impeded the publication of essential weekly jobless claims reports, as well as August’s factory orders and construction spending data.
Should the shutdown persist, the release of these statistics may still coincide with the Federal Reserve’s meetings on October 28-29.
Meanwhile, alternative metrics, such as the novel “real-time” unemployment rate estimates disclosed by the Federal Reserve Bank of Chicago, are likely to capture heightened attention from Fed officials, economists, and analysts striving to gauge economic conditions amid governmental inactivity.
According to the Chicago Fed’s latest report, which amalgamates various private and publicly accessible data, the jobless rate for September is estimated at 4.3%—consistent with August figures, alleviating fears of an abrupt spike in unemployment.
However, detailed analysis reveals a persisting lethargy within the labor market, suggesting that the Federal Reserve remains poised to reduce the benchmark interest rate by a quarter percentage point.
Status of Federal Reserve Discussions
The current discourse surrounding potential rate cuts heavily hinges on policymakers’ interpretations of labor market resilience, with the 4.3% unemployment rate perceived as indicative of full employment or as a precursor to a potential downturn.
Last month, the Fed amended its policy rate downward by a quarter point, bringing it to a range of 4% to 4.25%, as job gains markedly decelerated and unemployment figures incrementally rose in August.
Chicago Fed President Austan Goolsbee remarked on Marketplace Radio, “The data dogs are howling due to the absence of our usual data supply. The most reliable figure is the BLS number, yet in its absence, we’ll be utilizing the Chicago Fed’s number alongside other metrics.”
Insights from the Chicago Fed’s newly established bi-monthly data series reveal a slight dip in the hiring rates for unemployed individuals, coupled with a marginal uptick in layoffs and other forms of job separations.
This development has triggered “limited upward pressure” on the unemployment rate, according to the bank’s findings.
Contributions from Alternative Data Sources
Recent analytics from payroll processor ADP indicated a decrease in private payrolls by 32,000 in September. In light of the Bureau of Labor Statistics’ updates being rendered unavailable, these ADP numbers might gain additional significance, especially after Federal Reserve Governor Christopher Waller referenced them in August as reflecting ongoing deterioration in the job market beginning in May.
Further insights from technology firm Intuit, derived from a sample of approximately 400,000 small businesses utilizing its QuickBooks platform, revealed that firms with one to nine employees reduced their workforce by over 48,000 in September, equating to a decline of around 0.37%.
This demographic has consistently experienced employment reductions since early 2024, resulting in an average monthly employment drop of approximately 400,000 from an earlier peak of 13.1 million.
Amidst these troubling trends, U.S. employers reported fewer layoffs in September. Nonetheless, the year’s hiring intentions remain bleak, registering the lowest levels since 2009.
According to a recent analysis by global outplacement firm Challenger, Gray & Christmas, planned job cuts experienced a 37% month-on-month reduction to 54,064 in September.
Year-to-date, employers have announced 946,426 job cuts—the highest total for this period since 2020.
This year’s hiring endeavors have amounted to just 204,939 jobs—an all-time low for this timeframe since 2009, during the initial phase of recovery from the Great Recession.
Andrew Challenger, senior vice president at Challenger, Gray & Christmas, commented, At present, we are contending with a labor market in stagnation, inflating costs, and the emergence of transformative technology.
With rate cuts imminent, we might witness some stabilization in the fourth quarter, although other dynamics could compel employers to continue with layoffs or hold off on hiring.
Economists attribute the prevailing uncertainty to factors such as former President Donald Trump’s trade policies, immigration enforcement actions, and the rising prominence of artificial intelligence, all of which have curtailed labor supply and demand.

In the three months leading up to August, nonfarm payroll increments averaged only 29,000 per month—a stark contrast to 82,000 during the equivalent period the previous year.
Challenger highlighted that governmental entities contributed substantially to job reductions, with 299,755 cuts announced thus far in 2023, part of an unprecedented initiative by the White House aimed at contracting the federal workforce, with threats of additional layoffs emphasized during shelter discussions.
The burgeoning influence of AI has significantly impacted employment within the technology sector, with companies in the field revealing 107,878 layoffs this year alone. Challenger noted that AI is also hindering job acquisition, especially for entry-level engineering roles.
Should the shutdown endure into the forthcoming week, key reports expected later this month—including consumer price indexes, retail sales figures, housing starts, and producer inflation data for September—will likely remain unpublished.
This lack of information will adversely affect decision-making for households, investors, and policymakers.
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