To The Moon

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We just received a significant signal from the U.S. labor market: the Bureau of Labor Statistics (BLS) reported that job openings have now fallen below the number of unemployed Americans. For the first time in years, there are fewer available jobs than people seeking them.

At first glance, this may seem like just another data point in the endless stream of economic indicators. But for stock market investors, it carries far-reaching implications. Jobs power consumer spending, spending drives business growth, and growth fuels more jobs—a cycle that has supported U.S. economic expansion for decades. The concern is that this cycle is starting to reverse.

In this article, I’ll walk through why this matters, how it ties into Federal Reserve policy, the role of business uncertainty and tariffs, and what it means for investors looking ahead.

The Job Openings Ratio Slips Below One

The metric in question is the ratio of job openings to unemployed persons. It currently sits at 0.99, meaning there are slightly fewer jobs available than people looking for work. While the number itself may not seem dramatic, the trend is concerning.

This ratio peaked in 2022 at well above 1.5. In other words, there were once one-and-a-half jobs for every unemployed worker—a sign of a red-hot labor market. Since then, the trend has moved steadily downward, reflecting cooling demand for workers.

How Higher Interest Rates Trigger Slowdowns

The sharp decline in job openings is closely tied to Federal Reserve policy. Beginning in 2022, the Fed raised interest rates at the fastest pace in decades to combat runaway inflation. Higher interest rates act as a brake on economic activity by making borrowing more expensive.

Consider two examples:

• Buying a car: A family financing a $40,000 car at 3% interest might face a monthly payment of $718. At 7%, the same car costs $799 per month—a meaningful difference that causes many to delay purchases. That lost sale trickles down to the dealership, the salesman, the automaker, and eventually the broader economy.

• Buying a home: Mortgage rates have more than doubled from pandemic-era lows. For a $400,000 home, the difference between a 3% and a 7% mortgage rate is roughly $1,000 per month in payments. Potential buyers often step back, waiting for more favorable conditions. This hesitation affects realtors, movers, contractors, furniture retailers, and countless ancillary industries.

This dynamic explains why job openings fall as interest rates rise: reduced demand leads to less production, fewer sales, and fewer new hires.

Why Businesses Are Freezing Hiring Instead of Firing

Interestingly, while job creation has slowed, mass layoffs have not materialized. Unemployment remains historically low, suggesting that businesses are taking a cautious but patient approach.

The reason is rooted in recent history. Following the COVID-19 lockdowns, many firms faced immense difficulty rehiring workers. To attract talent, they were forced to raise wages, expand benefits, and offer flexible working conditions. Having invested so much in recruitment and retention, they are now hesitant to repeat that painful cycle.

Instead, businesses are allowing attrition to handle cost-cutting. As workers retire, quit, or change careers, many firms simply choose not to replace them. This explains why job openings are falling without a corresponding surge in layoffs.

The Tariff Factor: Uncertainty Over Policy

Another drag on business confidence has been the reintroduction of tariffs in 2025 under President Donald Trump. Since April, tariffs on imports have been raised and adjusted multiple times, creating a climate of uncertainty.

For many companies, the problem is not whether tariffs are set at 15%, 25%, or even 50%. The real issue is the unpredictability. Policies swing from hikes to pauses to cancellations, sometimes overturned in court before being reinstated. In such an environment, business planning becomes nearly impossible.

Firms hesitate to launch new products, expand into new states, or open new locations when they don’t know what their input costs or competitive dynamics will look like in six months. As one executive put it: “It’s not the cost, it’s the chaos.”

A Two-Speed Economy

All of this has created what can best be described as a two-speed economy:

1. Slowdown in hiring and investment – Job openings are shrinking, expansion plans are being shelved, and companies are hesitant to commit capital.

2. Stability in employment – Layoffs remain low, unemployment sits at historically favorable levels, and consumers—while cautious—are still employed and earning.

The result is a sluggish but not collapsing economy. Growth has slowed, but it hasn’t ground to a halt.

What the Federal Reserve Might Do Next

The Fed now finds itself in a delicate position. Having raised rates to fight inflation, it is watching closely as growth slows and labor demand weakens. The next step is likely a reversal.

Traders are currently pricing in a 95% chance of a rate cut at the Fed’s next policy meeting. Lower rates reduce borrowing costs, potentially stimulating consumer spending and business investment again.

The upcoming monthly jobs report will be another critical indicator. A weaker-than-expected report would almost certainly push the Fed toward cutting rates sooner.

Why a Severe Recession Is Unlikely

While risks are mounting, the probability of a deep, systemic recession remains low. There are several reasons for this:

• Stronger consumer balance sheets: Many households refinanced mortgages at record-low rates during the pandemic, cutting monthly costs and stabilizing household budgets.

• Lower debt burdens: Families used stimulus checks and pandemic-era savings to pay down credit card debt.

• Durable goods purchases already made: Consumers stocked up on appliances, electronics, and home improvements, reducing the need for near-term spending but also meaning fewer large financial shocks ahead.

In other words, while growth may slow, consumers are in better shape than in past downturns, providing a cushion against severe economic contraction.

Portfolio Implications: Stay Steady, Stay Invested

For long-term investors, the takeaway is not to panic. Economic slowdowns happen, and while the data points to softer growth, it does not scream financial crisis. My personal strategy remains unchanged:

• Regular capital allocation: Continue adding to the portfolio on a monthly basis.

• Focus on fundamentals: Invest in companies with strong balance sheets, durable cash flows, and long-term growth prospects.

• Avoid market timing: Resist the temptation to trade around short-term swings in data or policy.

Periods of uncertainty often create attractive opportunities for disciplined investors who maintain a long-term horizon.

Final Takeaways

• Job openings have slipped below the number of unemployed, signaling cooling demand for labor.

• Higher interest rates are the primary driver, slowing both hiring and consumer spending.

• Businesses are freezing hiring, not firing, thanks to past struggles with labor shortages.

• Tariff uncertainty is adding another layer of hesitation to corporate decision-making.

• The Fed is likely to cut rates soon, with markets pricing in a near-certain chance of easing.

• Consumer balance sheets remain strong, lowering the risk of a severe recession.

For investors, this environment suggests caution but not panic. While growth is slowing, the structural supports in place—low layoffs, solid household finances, and the likelihood of Fed support—make a 2008-style collapse improbable. The smarter move is to remain disciplined, add steadily to quality holdings, and prepare for the long game.