After Canada, US youth now face a tough job market – is America already in a hidden recession?

US recession indicators 2025: While the GDP number indicates the US economy is growing, but for millions of young Americans, it doesn’t feel that way, as per a report.

US GDP Is Up, But Recession Warnings Are Flashing

From rising unemployment among recent graduates to sluggish hiring across white-collar industries, the reality facing today’s young workers paints a far more complicated picture, one that looks and feels like a recession, even if it’s not officially called one.

Technically, the US avoided a recession this year. After a small dip in early 2025, GDP rebounded in the second quarter, keeping the economy in positive territory, as per an FT report. The National Bureau of Economic Research (NBER), the group that officially declares recessions, hasn’t raised the alarm.

But under the surface, warning lights are flashing.

In May, all six key indicators the NBER uses to assess recessions were either shrinking or stagnating. Still, not quite enough to declare a full-blown downturn.

ALSO READ: Oil & Gas Industry Layoffs 2025: ConocoPhillips, Chevron, BP, Petronas, OMV, among companies cutting jobs

Economist Warns: We May Already Be in a Recession

Pascal Michaillat, who is a professor of economics at the University of California, pointed out at the NBER’s shortcomings of relying on the research organisation’s approach, as per FT. He said, “It places too little emphasis on unemployment and vacancy rates,” adding, “Also, as it waits for data and revisions, recessions are often declared several months after they have begun,” as quoted by the report.

Michaillat, who is also a research associate at the NBER, used a real-time recession detection algorithm trained on a century of broader labour market data, and estimated a 71% probability that the US economy was already in recession in May, as reported by FT.

He explained that, “While the other NBER data might seem useful, the labour market reflects a more fundamental reality. Falling vacancies and rising unemployment are, in my view, a more reliable indicator of widespread economic distress," as quoted in the report.

ALSO READ: 2026 Social Security raise may get a Trump bump — here’s how much extra you will pocket

Young Workers Hit Hardest by Economic Slowdown

His warning comes as the US labor market is showing clearer signs of softening, and Americans just entering the job market are hit the hardest, as per a Yahoo Finance report. In August, unemployment for workers aged 16 to 24 rose to 10.5%, the highest since the pandemic, according to the report.

College Graduates Are Entering a Stalled Job Market

Even college degrees aren’t offering the safety net they once did. New data shows that recent college graduates (ages 22–27) are struggling more than the broader workforce, according to a report from the Bank of America Institute. In June, their unemployment rate was 4.8%, compared to 4% overall, as per the report. That’s a sharp change from pre-pandemic times when having a degree usually meant better job security.

Many of the industries these grads would typically enter, like consulting, tech, and finance, have slowed hiring or cut back altogether, according to Yahoo Finance. Additionally, with the uncertainty around tariffs and global trade, companies are playing it safe, waiting to see what’s next, as per the report.

ALSO READ: McDonald’s relaunches extra value meals — Big Mac, McNuggets and Egg McMuffin at low prices from today

What This Means for the Future of Work for Gen Z and Young Millennials

Economist Taylor Bowley from the Bank of America Institute, said that "People with college degrees like recent graduates might be finding themselves in an increasingly competitive environment that doesn't necessarily guarantee the same level of employment security that it once did," as quoted by Yahoo Finance.

She pointed to heightened uncertainty around tariffs and investment decisions, as well as new technologies reshaping entry-level roles, saying, "It's not atypical to see uncertainty before an election, because businesses wait to see what policies a new administration might bring," and added, "But this is a different kind of uncertainty — one that's been quite persistent since the start of the year and seems to be ongoing," as quoted in the report.

Even young workers who do land jobs aren’t feeling secure either. Glassdoor data shows that just 45% of entry-level employees feel confident about their employer’s future, which is the lowest of any group, and the mid-level workers came in at 48%, and senior employees at nearly 59%, as per Yahoo Finance.

ALSO READ: What happens to your uploaded photos on AI chatbots? Are they really private?

Daniel Zhao, chief economist at Glassdoor, explained that, "Sluggish hiring doesn't get quite as much attention as a layoff, but it has a very broad-based impact," adding, "It means folks can't get onto the career ladder in the first place, and it also means that workers who are employed can’t make progress up the career ladder," as quoted in the report.

Even the concerns about the rise of artificial intelligence replacing entry-level jobs are also playing a role, according to the report. In a recent New York Fed survey, 12% of service firms already using AI reported hiring fewer workers in the past six months and nearly a quarter of those planning to adopt AI expect to cut hiring soon, as reported by Yahoo Finance.

FAQs

What’s the current unemployment rate for youth?
As of August, unemployment for those aged 16–24 hit 10.5%, the highest since the pandemic.

Is AI really affecting job prospects for young workers?
Yes. About 12% of firms using AI have already cut hiring, and many more plan to scale back soon.