AI driven layoffs and immigration crackdowns are hitting the labor market at once. As white- and blue-collar jobs disappear, weakening consumer confidence threatens the spending that underpins the American economy.
Amazon, Block, Accenture, Atlassian. Each week brings a new headline: another major company laying off a large portion of its white-collar workforce and citing AI integration as the reason. At the same time, the construction sites and hospital wards that have until now propped up US job growth are threatened by the deportation of the immigrant workforce that staffs them. These are two structural shocks hitting the US labor market simultaneously, and together they pose a serious short-term threat to consumer spending, which drives the American economy.
Even before these twin shocks took hold, Fed Chair Jerome Powell observed at the August 2025 Jackson Hole Symposium that the labor market was exhibiting unusual fragility: payroll growth had stalled and job gains were narrowing sharply. Monthly payroll growth had slowed to an average of just 35,000 jobs (down from 168,000 per month in 2024) and the unemployment rate for recent college graduates had climbed to 4.8%, above the national average for the first time in decades. With 92,000 jobs lost this February and growth already concentrated in just a few sectors, the labor market was poorly positioned to absorb the disruptions now arriving from two directions at once.
