The Trump Economy: Less Hiring As Record 105 Million Americans Sit Outside Labor Force
KEY POINTS
- Private-sector hiring has slowed sharply, with ADP data showing weekly job growth down roughly 60% from its early May peak.
- A record 105.8 million Americans are classified as not in the labor force, even as unemployment remains historically low.
- Economists are watching whether AI adoption, policy shifts and broader economic trends are reshaping U.S. workforce participation.
Recent U.S. labor market data are sending mixed signals, resulting in starkly different headlines about the state of the economy.
“U.S. filings for unemployment aid fall to 187,000 last week, fewest since 1969” is the Associated Press headline on a July 23 story about official unemployment claim numbers.
“Number of Americans not working hits record high under Trump” is the headline chosen by The Independent in a July 22 report on the number of Americans who have left the active labor force entirely.
“US private sector job growth slows for fourth straight week” is how Mortgage Professional framed its July 22 story about weak private-sector job growth.
ADP NER Pulse, Stanford Digital Economy Lab.
Data from the ADP National Employment Report (NER) Pulse reveals that private-sector hiring slowed for its fourth consecutive week in early July 2026 to an average of just 16,500 jobs per week for the four weeks ending July 4. This marks a 60% decline from early May, when weekly private job additions peaked at 40,750. Similarly, the broader June nonfarm payrolls report showed U.S. businesses added just 57,000 jobs, less than half of the 115,000 expected by economists.
Slowing job creation has not been accompanied by rising layoff numbers. Applications for weekly unemployment benefits tumbled by 22,000 to 187,000, the fewest initial unemployment claims since September 1969.
The U.S. economy has effectively entered a low-hire, low-fire environment.
A major factor keeping official unemployment figures relatively low despite weakening job creation is that a significant number of workers have exited the job market entirely.
Figures from the Federal Reserve Bank of St. Louis indicate that the number of Americans classified as “not in the labor force” (NILF) has hit an all-time high of 105.8 million. Over 832,000 workers dropped out of the labor force in June alone, driving the employment-population ratio down to 59%—its lowest level since September 2021. Although retirees account for roughly half of those outside the labor force, American Enterprise Institute economist Nicholas Eberstadt told the New York Post that about 10%, or roughly 10 million, are able-bodied Americans between the ages of 25 and 54.
What remains unclear is whether the growing number of able-bodied working-age Americans outside the labor force represents a temporary response to a slowing economy or a deeper structural shift. While generative AI tools are reshaping corporate workflows, businesses operating under the Trump administration are also navigating tariff instability, inflation pressures, and geopolitical volatility. Ultimately, time will tell to what extent tech-driven displacement and Trump administration policies are contributing to these unusual labor market dynamics.
