US Hiring Grinds Nearly to a Halt Just Weeks Before Midterms

The American job engine sputtered badly in September, with employers adding a mere 29,000 positions — a fraction of what economists had forecast and the clearest sign yet that the labor market is losing steam just as voters prepare to head to the polls for the midterm elections.

The figure, released Friday by the Bureau of Labor Statistics, landed at less than half of the roughly 70,000 jobs economists had penciled in, and marked a stark reversal from August’s revised gain of 133,000. The unemployment rate ticked up to 4.2% from 4.1%, continuing a gradual drift that has pushed joblessness higher than at any point since last November.

This was the final employment snapshot before the 3 November midterms, and its timing could hardly be worse for the White House. The report lands amid growing public frustration over living costs, with a new AP/NORC poll showing just 17% of Americans approve of President Donald Trump’s handling of the cost of living — a record low that undercuts his frequent claims that the United States is running the “hottest” economy in the world. Only 26% approve of his broader economic stewardship, also a new low.

Trump himself seemed to acknowledge the gap between his rhetoric and public perception earlier this week, telling a White House audience, “I’ve done a very bad job of explaining how good the country is doing.”

The slowdown was not evenly spread. Healthcare accounted for most of the modest gains, adding 17,000 jobs, while the information, financial and professional services sectors all shed workers. Across much of the rest of the economy — from retail to technology — headcounts barely moved at all, suggesting employers are neither aggressively hiring nor rushing to lay people off. Economists have taken to calling this dynamic a “slow-hire, slow-fire” labor market, in which companies are hunkering down rather than making big staffing bets in either direction.

Adding to the unease, the government revised down its estimates for July and August by a combined 60,000 jobs. July’s figure was revised into negative territory, showing the economy actually lost 10,000 jobs that month — an unusual contraction that had already rattled analysts when first reported.

Wage growth also slowed sharply. Average hourly earnings rose just 3% over the past year, the weakest pace in more than five years, a trend that could ease some inflationary pressure but will do little to comfort workers already squeezed by rising costs elsewhere.

The pain is not being felt equally. Unemployment among Black Americans jumped a full percentage point to 7%, double the rate for white workers, underscoring how a cooling labor market tends to hit already vulnerable groups hardest. Job openings and hiring overall were little changed in August, reinforcing the sense of a market in stasis rather than freefall.

Not every signal was quite so grim. Separate data from payroll processor ADP, released earlier in the week, painted a rosier picture of private-sector hiring, which it said accelerated for the first time since May, adding 90,000 jobs on the strength of healthcare, education and hospitality. Jobless claims also edged down for a fourth consecutive week, according to the Labor Department, suggesting layoffs remain contained even as new hiring dries up.

Economists cautioned against reading too much into a single weak month. George Brown, senior economist at Schroders, noted that job gains have been “a rollercoaster” throughout the year and that one soft report doesn’t necessarily herald a lasting collapse. Bradley Saunders of Capital Economics described the figure as “not disastrous,” pointing to a drop in government employment and changes to temporary visa policy as factors weighing on the headline number. Jeffery Roach, chief economist at LPL Financial, framed the divergence as tension between “goods producing sectors that support the AI boom” and service industries grappling with the disruptive effects of that same technology.

The report carries significant weight for the Federal Reserve, which raised interest rates last month for the first time in three years after Fed chair Kevin Warsh argued the labor market was “running consistent with full employment” even as “inflation is too high and has been for too long.” Friday’s data has cooled expectations that the central bank will push through a second rate increase at its final policy meeting before the midterms, with most officials now seen as more likely to wait until December if another hike comes at all.

Inflation, meanwhile, shows little sign of loosening its grip on household budgets. Mortgage rates jumped from 7% to 7.28% this week — the sharpest weekly rise since 2022 — while the 10-year Treasury yield, a benchmark for loans across the economy, climbed to a 24-year high amid a broader global bond sell-off. Elevated oil prices, linked in part to the ongoing US-Israel war on Iran, have cost the average American household an estimated $936 so far.

Taken together, the picture is one of an economy that is neither collapsing nor thriving — a labor market stuck in neutral, wages failing to outpace the cost of living, and borrowing costs climbing even as hiring stalls. For voters weighing the state of their wallets heading into the midterms, that muddled reality may prove more consequential than any single headline number.