Alternative Jobless Claims Data Signals Labor Market Weakness Amid Government Shutdown

This analysis is based on the CNBC segment featuring Steve Liesman on “Squawk Box” [1], which aired on November 7, 2025, discussing alternative jobless claims data that suggests potential further weakening in the U.S. labor market during an unprecedented government shutdown.

The record-long government shutdown has prevented the Bureau of Labor Statistics from releasing critical employment data, including the monthly nonfarm payrolls report [1]. This data blackout has forced economists and policymakers to rely on alternative indicators to assess labor market conditions. Economists surveyed by Dow Jones had expected the October report to show a decline of 60,000 jobs and an unemployment rate increase to 4.5% [1].

Multiple alternative data sources paint a concerning picture:

• ADP private payrolls
  showed only 42,000 jobs added in October [1]
• Challenger, Gray & Christmas
  reported 153,074 job cuts in October, the highest level for the month in 22 years [2]
• ISM employment indexes
  showed contraction (48.2% for services, 46% for manufacturing) [1]
• Bank of America payroll growth
  data indicated 0.5% year-over-year growth [1]

Chicago Fed President Austan Goolsbee characterized the current environment as a “low-hiring, low-firing environment” that “characterizes periods of high uncertainty, when businesses have pulled back” [1].

Alternative data reveals particular weakness in small business employment. Homebase data shows employees working down 2.9% from January levels with hours worked also off 2.9% [1]. ADP data specifically showed businesses with fewer than 250 people lost 34,000 workers in October [1], indicating a two-tier labor market where larger firms continue adding workers while smaller businesses have largely stopped hiring.

The surge in job cuts is particularly pronounced in the technology sector, with companies announcing 33,281 cuts in October - nearly six times the level in September [2]. This reflects ongoing restructuring due to AI integration and cost-cutting measures, similar to the disruptive technology landscape of 2003.

The 153,074 job cuts announced in October represent a 175% increase from October 2024 and an 183% increase from September 2024 [2]. Year-to-date job cuts have reached 1,099,500, the highest level since 2020 when the pandemic caused massive layoffs [2].

Bank of America data reveals significant disparities in wage growth, with higher earners seeing 3.7% year-over-year gains, middle earners at 2%, but lower income workers only seeing 1% increases [1]. This widening gap suggests uneven economic recovery and potential consumer spending weakness.

The data gap is creating significant challenges for Federal Reserve policymakers. Goolsbee noted that while alternative data provides some insight into labor market conditions, there’s insufficient alternative information on inflation, which is giving him “pause” about further interest rate cuts [1]. This policy uncertainty could affect market stability.

The combination of weak hiring, scattered layoffs, and small business vulnerability suggests a gradual cooling of the labor market rather than a sharp downturn. However, the record-high job cut announcements indicate potential trouble ahead if this trend continues. The absence of official data during the shutdown is creating uncertainty for markets and policymakers, potentially affecting investment decisions and economic planning.

Alternative data sources, while valuable during the shutdown, may have different methodologies and coverage than official government statistics [1]. This raises questions about the accuracy and comparability of current assessments.

The alternative jobless claims data landscape reveals a labor market under significant stress, with October job cuts reaching their highest level for the month in 22 years at 153,074 positions [2]. The technology sector has been particularly hard hit, with cuts surging nearly sixfold from September levels [2]. Small businesses show disproportionate vulnerability, with employment declines significantly outpacing larger firms [1].

The record-long government shutdown has created an unprecedented data vacuum, forcing reliance on alternative indicators that, while informative, lack the comprehensive coverage and standardized methodology of official BLS reports [1]. This situation presents challenges for policymakers, particularly the Federal Reserve, which must make interest rate decisions with incomplete inflation data [1].

The current labor market conditions reflect what Chicago Fed President Goolsbee describes as a “low-hiring, low-firing environment” characteristic of high uncertainty periods [1]. While not indicating a collapse, the data suggests a gradual cooling that could accelerate if the government shutdown persists and alternative indicators continue showing weakness.