Prominent business leaders had also flagged troubling signs in the economy before the July jobs report dropped. IBM<\/a> Vice Chair and former Trump advisor Gary Cohn went on CNBC<\/a> a day before the jobs data, noting \u201cwarning signs below the surface.\u201d Cohn said he pays close attention to the quits rate in the monthly JOLTS data, arguing that 150,000 fewer quits was an ominous sign of poor economic health.<\/p>\n DeLong sounded a prophetic note, writing that \u201cpolicy uncertainty\u201d over trade, immigration, inflation, and technology has \u201cparalyzed business planning,\u201d leading to a self-reinforcing cycle of hiring freezes. New entrants to the job market are bearing the brunt of the retreat to risk aversion. In other words, the college graduate class of 2025 is really unlucky.<\/p>\n The economist argued that the uncertainty causes companies to delay major decisions\u2014including hiring\u2014in the face of an unpredictable policy environment.<\/p>\n \u201cThis risk aversion is particularly damaging for those at the start of their careers, who rely on a steady flow of entry-level openings to get a foot in the door,\u201d he wrote.<\/p>\n DeLong has sounded similar warnings of a slowdown for years. He talked to Fortune in 2022 about his theory of the economy starting to sputter from his book Slouching Towards Utopia<\/a>. In 2025, he wrote, the big story in the jobs market is not actually AI, but something different.<\/p>\n So, what\u2019s really keeping freshly minted graduates from clinching that all-important first job? DeLong cited Bloomberg BusinessWeek\u2019s Amanda Mull<\/a> and her theory about \u201cstochastic uncertainty\u201d\u2014a cocktail of unpredictability around government policies, trade, immigration, and inflation. Companies aren\u2019t firing; instead, they\u2019re just waiting. And many are delaying new hires in anticipation of possible sudden shifts in tariffs, inflation rates, and regulatory environments. The result is a wait-and-see climate where employers, worried about future economic shocks, have selected caution over expansion. The holding pattern hits new entrants to the workforce especially hard.<\/p>\n While\u00a0overall unemployment in the U.S. remains low, the situation is uniquely difficult for new graduates relative to the rest of the workforce. Citing economists including Paul Krugman, DeLong noted that while the absolute unemployment rate for college graduates isn\u2019t alarming, the\u00a0gap\u00a0between graduate unemployment and general unemployment rates is at record highs. In the past, higher education reliably led to lower unemployment, but now recent grads are struggling \u201cby a large margin\u201d compared to previous generations.<\/p>\n As previously reported by Fortune Intelligence<\/a>, Goldman Sachs has argued that the college degree \u201csafety premium\u201d is mostly gone. The team, led by Goldman\u2019s chief economist Jan Hatzius, wrote: \u201cRecent data suggests that the labor market for recent college graduates has weakened at a time when the broader labor market has appeared healthy.\u201d<\/p>\n It also found that since 1997, young workers without a college degree have become much less likely to even look for work, with their participation rate dropping by seven percentage points.<\/p>\n Mull cited an analysis by the Federal Reserve Bank of New York which found that tech and design fields, including\u00a0computer science, computer engineering, and graphic design, are seeing unemployment rates above 7%\u00a0for new graduates.<\/p>\n Although the tech sector is buzzing about AI\u2019s potential to replace junior analysts or automate entry-level tasks, DeLong urged caution in assigning blame. In his typical style, he noted, \u201cthere is still [no] hard and not even a semi-convincing soft narrative that \u2018AI is to blame\u2019 for entry-level job scarcity.\u201d Hiring slowdowns, he pointed out, are driven by broader economic forces: uncertainty, risk aversion, and changes in how companies invest.<\/p>\n Here again, DeLong\u2019s analysis rhymes and aligns with recent research from Goldman\u2019s Hatzius. The bank\u2019s quarterly \u201cAI Adoption Tracker,\u201d issued in July, found that the unemployment rate for AI-exposed occupations had reconciled with the wider economy, which contradicts fears of mass displacement. They also noted there have been\u00a0no recent layoff announcements\u00a0explicitly citing AI as the cause, underscoring that it\u2019s contained to disruption of specific functions, not entire industries.<\/p>\n Crucially, he argued, rather than hiring people, companies in the tech sector are splurging on \u201cthe hardware that powers artificial intelligence\u201d\u2014notably Nvidia\u2019s high-performance chips\u2014fueling a boom in capital investment while sidelining junior hires.<\/p>\n \u201cFor firms, the calculus is straightforward: Investing in AI infrastructure is seen as a ticket to future competitiveness, while hiring junior staff is a cost that can be postponed.\u201d<\/p>\n Underpinning these trends is a\u00a0shift away from any and all risk. Employers prefer to hire for specific short-term needs and are less willing to invest in developing new talent\u2014leaving young applicants caught in a cycle where\u00a0\u201cjust getting your foot in the door\u201d is more difficult than ever. Incumbent workers, worried about job market uncertainty, are less likely to change jobs, leading to fewer openings and greater stagnation.<\/p>\n DeLong\u2019s analysis harmonized with Goldman Sachs\u2019 findings about the declining premium attached with a college degree:<\/p>\n \u201cFor the longer-run, the rise in the college wage premium is over, and a decline has (probably) begun.\u201d<\/p>\n For decades, he continued, a college degree was a ticket to higher earnings, and the labor market rewarded those with advanced skills and credentials. In recent years, though, \u201cthis has plateaued and may even be falling.\u201d The causes are complex, he added, but the takeaway: While degrees remain valuable, they are\u00a0no longer the ever-ascending ticket to prosperity\u00a0they once were.<\/p>\n The disappearing premium, charted. <\/p>\n
The unemployment rates are reconciling. <\/p>\n