Goldman Sachs Economist Warns of Near-Zero Employment Growth Amid Market Decline

This analysis is based on the CNBC ‘Squawk on the Street’ interview [3] with Goldman Sachs Chief Economist Jan Hatzius published on November 7, 2025, where he provided a stark assessment that “employment growth is fairly close to zero.”

Hatzius’s near-zero employment growth assessment emerged during a challenging market session, with major U.S. indices showing significant declines. The S&P 500 fell 0.47% to 6,664.42, while the NASDAQ Composite dropped 0.75% to 22,720.11, and the Dow Jones declined 0.22% to 46,693.41 [0]. Technology stocks led the decline with the sector posting the worst performance at -1.31%, while defensive sectors like Utilities (+1.84%) and Financial Services (+1.11%) showed relative strength [0].

The employment commentary aligns with Hatzius’s recent warnings about the U.S. economy operating at “stall speed” and suggests that optimistic GDP estimates may be overstated due to deteriorating labor market conditions [1][2]. Goldman’s labor market tightness tracker has fallen to 2016 levels and continues trending downward, while survey measures of manufacturing and services growth have fallen “well below 50, consistent with employment stagnation or even contraction” [2].

The current economic environment is complicated by multiple factors creating information gaps and structural shifts:

: Missing official employment data due to the ongoing government shutdown has created a vacuum of reliable information, forcing reliance on private surveys and estimates [2]. The August jobs report showed the U.S. economy created only 22,000 jobs, badly missing estimates of around 75,000, with June and July figures revised down by 21,000 jobs total [1].

: Younger workers face growing hiring challenges as AI adoption reshapes labor demand, particularly in “routine cognitive” occupations [2]. This technological disruption coincides with monetary policy adjustments, creating a uniquely challenging environment for economic forecasting.

: Household surveys show unprecedented pessimism, with “expected change in the unemployment rate over the next year” never being this bad outside recessionary periods since the University of Michigan started tracking this data in 1978 [2].

Hatzius emphasized that “job market indicators often provide more reliable information about current growth than the preliminary GDP estimates” [2]. Current GDP estimates showing 3.8% growth in Q2 and 3.3% in Q3 may be overly optimistic given the employment weakness.

The market’s sector performance reveals investor risk aversion, with defensive sectors outperforming while growth sectors underperform. Technology (-1.31%) and Consumer Cyclical (-0.90%) declined sharply, reflecting concerns about economic growth, while Utilities (+1.84%) and Financial Services (+1.11%) provided safety [0].

Despite the concerning employment data, Hatzius predicts “relatively slow” growth before improvement in 2026 following Federal Reserve rate cuts. He expects the Fed to deliver “three cuts in September, October, December, and then probably another couple of cuts next year” [1], though this timeline may face adjustments if employment conditions deteriorate further.

1. Employment Market Contraction
   : The combination of near-zero job growth and rising unemployment expectations could trigger a negative feedback loop in consumer spending and business investment [2].

2. AI-Driven Labor Disruption
   : The accelerated adoption of AI technologies could lead to faster-than-expected job losses in certain sectors, particularly affecting younger workers and routine cognitive occupations [2].

3. Policy Uncertainty
   : Ongoing tariff disputes and fiscal policy changes could further suppress business hiring and investment decisions [1][2].

1. Labor Market Indicators
   : Weekly jobless claims, ADP employment reports, and various survey-based employment measures for early warning signals [2]

2. Federal Reserve Policy
   : Any changes to the expected pace and timing of interest rate cuts, particularly the December meeting [1]

3. Corporate Earnings Guidance
   : Forward-looking statements from major companies regarding hiring plans and capital expenditure

4. AI Adoption Metrics
   : Industry-specific data on AI implementation and its impact on employment patterns

5. Government Resolution
   : Progress toward ending the shutdown and restoring official economic data flows

The employment market assessment from Goldman Sachs’s chief economist suggests the U.S. economy may be weaker than current GDP estimates indicate, with labor market indicators pointing to stagnation or potential contraction. The combination of near-zero job growth, AI-driven disruption, and policy uncertainty creates a complex environment for economic forecasting. Market participants should monitor labor market indicators closely, as employment data often provides more reliable growth signals than preliminary GDP estimates. The defensive sector outperformance suggests investors are already positioning for potential economic weakness, while the technology sector decline reflects concerns about growth prospects in a challenging employment environment.