Fed Chair Powell Highlights Youth Employment Challenges Amid Cooling Labor Market

Federal Reserve Chair Jerome Powell has identified a troubling trend in the U.S. labor market, particularly for young Americans entering the workforce. Speaking at a post-FOMC press conference, Powell described an environment where "kids coming out of college and younger people, minorities, are having a hard time finding jobs." The current combination of low hiring and low firing rates creates unusual barriers for first-time job seekers.

While some analysts point to AI adoption as a potential factor—Deutsche Bank recently warned of "the summer AI turned ugly"—Powell maintains that broader economic cooling remains the primary driver. This view finds support from Goldman Sachs and UBS economists, who argue AI's impact appears limited for now. UBS chief economist Paul Donovan's analysis "The Kids Are Alright?" notes the U.S. youth unemployment spike contrasts with international trends, suggesting automation alone doesn't explain the phenomenon.

The decline in job reallocation—the churn of position creation and elimination—has particularly constrained opportunities. As Goldman's Pierfrancesco Mei observes, "finding a job takes longer in a low-turnover labor market." This structural shift creates unique challenges for new entrants even as established workers face relatively stable employment conditions.