Imagine waking up on the first Friday of the month, grabbing your coffee, and realizing the jobs report that everyone waits for simply isn’t coming. That’s exactly where we are right now.
The usual ritual — traders glued to Bloomberg, economists tweeting hot takes, the dollar swinging wildly — got canceled because of the government shutdown. The Bureau of Labor Statistics couldn’t complete its household survey. So October’s official employment numbers might never see the light of day.
In a normal world that would be chaos. But markets hate a vacuum, and private data providers have rushed in to fill it. The picture they’re painting isn’t the “soft landing” story we keep hearing. It’s more like the runway lights are starting to flicker.
The Private Numbers Are Speaking Loudly
Let’s start with the headline that actually dropped: the ADP private payroll report. Only 42,000 jobs added in October. That’s not just weak — it’s the slowest pace since the pandemic recovery began.
But one month doesn’t make a trend, right? Except every other real-time indicator is singing the same tune.
- Revelio Labs, which tracks actual workforce changes through company records, recorded a net loss of over 9,000 positions last month.
- LinkUp, monitoring online job listings, saw roughly 5,000 fewer openings.
- Indeed’s job-posting index has rolled over hard — now back to early-2021 levels, with year-over-year declines in almost every sector.
These aren’t surveys asking companies what they plan to do. These are hard counts of postings disappearing and actual headcount shrinking. In my experience, when private data diverges this sharply from the (missing) official numbers, reality tends to be closer to the private side.
It’s Not Just One Industry
A common excuse during slowdowns is “it’s only tech” or “it’s only retail.” Not this time. Logistics firms are freezing headcount. Hospitals are pausing hires. Even professional-services companies — the ones that kept growing through 2023 and 2024 — are pulling back.
When hiring freezes go economy-wide like this, it usually signals a structural drop in demand, not a temporary blip. Companies don’t freeze hiring because they feel generous; they do it because orders are soft and margins are getting squeezed.
The Fed’s Impossible Balancing Act
The Federal Reserve has two jobs: keep unemployment low and keep inflation around 2%. Right now those goals are pulling in opposite directions harder than usual.
“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation.”
— Fed Chair, recent press conference
Translation: if they keep rates high to fight lingering services inflation, they risk pushing unemployment sharply higher. If they cut aggressively to save jobs, they risk reigniting the inflation they spent two years crushing.
History says the Fed almost always gets this balancing act wrong at turning points. They either ease too late (2001, 2008) or tighten too long (1937, 2018-2019 mini-cycle). I’m not saying we’re there yet, but the yellow lights are definitely outnumber the green ones.
What Happens When Official Data Disappears?
Markets run on narratives, and narratives run on data. When the most important monthly data point vanishes, traders turn to whatever is available. That makes alternative sources suddenly very powerful.
We saw something similar during the pandemic when weekly jobless claims became the single most-watched indicator on the planet. My inbox was flooded every Thursday morning. I suspect we’re about to enter a period where ADP, Indeed, and even Homebase’s small-business shift data become market-moving events.
The danger? These datasets are noisier and less vetted than the BLS numbers. A bad read one month can swing bond yields 15 basis points before anyone figures out it was an outlier. Expect volatility to stay elevated.
Where Inflation Fits In
Here’s the part that keeps some Fed officials awake at night: inflation isn’t dead yet. Shelter costs are still rising faster than the Fed wants, wage growth in services remains around 4-5%, and inflation expectations have ticked higher again.
If the labor market were screaming hot, the Fed could comfortably stay on hold. But with private data showing clear deceleration — and potentially outright contraction — the “insurance cut” argument gets stronger every week.
Put simply, the cost of waiting too long is starting to look higher than the cost of easing a bit early.
What the Fed Will Probably Do Next
My base case hasn’t changed much in the last few weeks:
- Another 25 basis-point cut in December unless we get a nasty upside inflation surprise.
- Pause in January to assess the data flow.
- Possibly one more cut in Q1 2026 if wage growth keeps cooling and layoffs continue creeping higher.
- Hold steady after that unless recession signals flash bright red.
Aggressive 50 basis-point moves or a full cutting cycle feel off the table for now. The labor market is softening, but it’s not collapsing. Inflation is sticky, but not accelerating. The Fed can afford to move deliberately.
How Investors Should Position
This environment rewards flexibility and punishes complacency. Here are the moves that make sense to me right now:
- Extend duration modestly. If the bond market starts pricing slower growth, longer-dated Treasuries and investment-grade credit look attractive.
- Rotate toward defense. Healthcare, staples, and utilities have held up well and pay decent dividends.
- Avoid the momentum chase. The “Magnificent 7” trade is long in the tooth; unprofitable tech and crypto feel especially vulnerable if liquidity tightens even slightly.
- Watch small-business surveys like a hawk. NFIB hiring plans and compensation intentions lead the BLS data by months.
- Keep dry powder. Volatility is your friend when the Fed is this data-dependent.
Perhaps the most interesting aspect — and the one I think markets are underpricing — is how quickly the narrative can flip once the labor market becomes the primary focus. We saw it in reverse in 2022 when inflation took over. The pendulum swings fast.
The economy isn’t falling off a cliff. Growth is slowing, not stalling. But momentum matters, and right now momentum is clearly pointing down in the job market. For the first time in almost three years, the Fed’s biggest worry might be shifting from prices back to employment.
And history tells us that when the Fed makes that shift, it rarely manages a perfectly smooth landing.
Stay nimble.
