Daly: Low-hiring, low-firing jobs market vulnerable to changes
TL;DR
San Francisco Fed President Mary Daly warns the U.S. labor market is fragile, with low hiring and rising layoffs, risking a shift to 'no-hiring, more-firing.' Recent data shows job cuts surged in January 2026, while hiring hit lows, and worker confidence is at record lows. The Fed must balance inflation and employment amid these vulnerabilities.
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Daly: Low-hiring, low-firing jobs market vulnerable to changes
San Francisco Federal Reserve Bank President Mary Daly has highlighted growing concerns over the fragility of the U.S. labor market, which remains in a "low-hiring, low-firing" state but faces risks of shifting toward a "no-hiring, more-firing" environment according to Daly. This assessment aligns with recent data showing a surge in job cuts, with U.S.-based employers announcing 108,435 layoffs in January 2026—a 205% increase from December 2025 and the highest January total since 2009 according to CNBC. Despite these cuts, hiring rates have remained subdued, with January 2026 marking the lowest hiring level since 2009 according to CNBC.
The labor market's instability is compounded by mixed signals in broader economic indicators. While the unemployment rate remains near 4.6%, a four-year high, nonfarm payrolls have shown uneven growth, and worker confidence in finding new jobs has fallen to a record low of 44.9% in September 2025 according to CNBC. High-profile layoffs at companies like Amazon and UPS, which account for over 40% of January's announced cuts, underscore sector-specific corrections following pandemic-era hiring booms according to CNBC.
Daly emphasized the need for the Federal Reserve to balance its dual mandate of price stability and maximum employment, noting that inflation above the 2% target heightens the sense of precarity according to Reuters. Although the labor market's vulnerabilities are concentrated in overhired sectors or those undergoing AI-driven restructuring, the broader trend of stagnant hiring and rising layoff fears could erode worker confidence further according to CNBC. The Fed's next moves will likely hinge on whether these trends persist and how they interact with inflationary pressures according to the San Francisco Fed.
