US Labor Market Resilience Dampens AI Layoff Fears

The US labor market has shown resilience, with unemployment averaging 4.1% in the last three months and netting out recent highs. Job growth of 0.4% YoY in August is in line with our estimate of "breakeven" job growth, which keeps unemployment flat. Despite fears of mass layoffs due to AI, job loss has been minimal so far. However, the dimming job prospects of young college grads could be a warning sign. Healthcare's post-pandemic restaffing drove most net private sector job gains in 2024 and 2025, but growth has slowed in 2026.