Young America faces an economic crisis
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Younger adults are facing the worst labor market shock in years, one far more acute than the rest of the population.
Why it matters: There's no denying the misery for young people who can't find work. It might stunt their career growth for decades to come.
Threat level: What's holding back hiring is a mix of fleeting, cyclical factors — economic uncertainty as a result of Trump's trade policies, for instance, or high interest rates.
- Other factors, like the uptake of AI eliminating entry-level positions, are likely structural. The result might be a difficult hiring environment for younger people for the foreseeable future.
- Young but less-educated Americans also feel the pinch. The sluggish pace of job gains is widespread across the economy, including in industries that, in normal times, would be the most likely to hire them.
What they're saying: "There is a pile-up of young people that are looking for work," says Guy Berger, the director of economic research at the Burning Glass Institute.
- "The risk is a lost generation of young people who took a long time to find work," he said.
- "They are struggling to get on the first step of the career escalator and that means that they won't get as high on the pay escalator over the course of their career — unless things turns around."
Between the lines: Revisions to government data released on Tuesday showed that the economy added roughly 850,000 jobs in the 12-month period through last March — half as many as previously estimated.
- In percentage terms, the information sector — a catch-all category that includes data processing — saw the steepest downward revision, followed by wholesale trade and leisure and hospitality.
By the numbers: The unemployment rate among 16- to 24-year-olds was 10.5% in August, the highest since the aftermath of COVID. Excluding that period, youth unemployment has not been this high since 2016.
- The unemployment rate for 20- to 24-year-old college graduates rose for the fourth month in August.
- That rise is now being mirrored among workers whose education tops out at high school, as well as those who completed two-year college programs.
- Some workers are being laid off, but that younger cohort is also entering the workforce in droves and not finding work — a phenomenon that puts upward pressure on the unemployment rate.
What to watch: Consumers assign just a 45% chance, on average, of finding a new job if their current position was eliminated, according to a New York Fed survey — the slimmest odds on record (dating to 2013) and most pronounced among the least-educated workers.
- Across age groups, workers under 40 were most pessimistic that they would lose their jobs in the year ahead, tied with those 59 years and older.
The bottom line: For years, there has been a reality gap between consumers' sour perception of the economy and decent indicators (the "vibecession").
- There is no disconnect for young Americans: The job market for them is just as bad as they believe it is.
