Additional Coverage:
- Economists predict tough times ahead for workers in 2026 — should you be worried? (marketrealist.com)
Economists Split on 2026 Job Market: A Mixed Bag of Hope and AI-Driven Fear
The American job market is facing a period of uncertainty as 2026 approaches, with economists offering a range of predictions from cautious optimism to stark warnings of widespread layoffs. Following years of volatility in the tech sector and the looming presence of artificial intelligence, many are left wondering what the new year will bring for workers.
Federal Reserve Chair Jerome Powell characterized 2025 as a “low hire, low fire” environment, where companies largely avoided significant layoffs but also limited new job creation. However, that trend shifted towards the end of the year, with numerous employers initiating substantial layoff drives that left thousands without work just before the holiday season. The outlook for 2026 remains a point of contention among experts.
One factor muddying the waters is the delayed release of crucial economic reports by the administration due to a government shutdown, leaving many analysts without a complete picture of the current economic landscape. Despite this, some economists anticipate an improved job market in 2026, with an increase in hiring and a reduction in layoffs. This positive outlook is partly attributed to an expected expansion in the healthcare sector, as reported by Newsweek.
However, not all share this sanguine view. Economist Daniel Hamermesh draws parallels between potential 2026 tariffs and the 1973 oil crisis, a period marked by high unemployment and rising costs. Hamermesh predicts that the retail and services sectors would bear the brunt of any future layoffs, driven by a decrease in consumer spending.
Aaron Sojourner, a senior researcher at the W.E. Upjohn Institute for Employment Research, paints an even broader picture of risk.
“Unemployment is rising, and job growth is slowing broadly across sectors. Wage growth has decelerated versus a year ago,” Sojourner explained, suggesting that no sector is immune.
A significant driver of potential unemployment spikes, according to experts, is the accelerating adoption of artificial intelligence. While designed to assist humans, AI has already begun to replace human roles.
In 2025, Amazon discussed the potential of AI while simultaneously eliminating approximately 14,000 corporate positions. Similarly, Salesforce’s CEO noted that AI chatbots enabled the company to cut 4,000 roles.
Experts believe that individuals engaged in repetitive cognitive tasks are particularly vulnerable to this shift.
Eric Woodard, CEO of the career coaching firm Win At Work, elaborated on the types of roles most at risk: “Roles built on predictable, rules-based knowledge work-accounting, basic legal drafting, contract review, compliance monitoring, junior software development, financial modeling, paralegal summarization-are directly in the crosshairs.” He added, “Current-generation AI now handles these workflows quickly and accurately, and companies are waking up to how many steps no longer require human involvement.”
As 2026 approaches, the nation watches to see whether the optimistic predictions of a rebounding job market will materialize, or if the concerns about economic headwinds and the transformative power of AI will lead to further challenges for the American workforce.