WASHINGTON, Oct 5 – The United States is heading into the November midterm elections with an unemployment rate of 4.2%, a figure that by traditional measures would suggest a healthy labor market and an economy operating close to full employment.
Yet the headline number does not fully capture how American workers are experiencing the economy. Hiring has slowed, workers are changing jobs less often, inflation continues to erode some of the gains from higher pay and the size of the labor force has struggled to expand. Those conditions have left many households feeling less secure despite the historically low unemployment rate.
The contrast presents a challenge for President Donald Trump and Republicans as voters prepare to choose members of Congress on Nov. 3. Polling has shown that Americans remain dissatisfied with the way the administration and the Republican Party are handling the economy, even as the job market remains considerably stronger than during many previous periods of economic weakness.
The latest Labor Department employment report, released Friday, offered the final major look at the labor market before the election. It showed an economy that continues to create jobs, but at a much slower pace than during the extraordinary post-pandemic recovery.
The current environment is therefore different from the employment boom that followed the COVID-19 pandemic, when companies competed aggressively for workers and employees had greater freedom to leave jobs for better pay. That period of unusual worker leverage has largely faded.
Unemployment remains historically low
The 4.2% unemployment rate remains one of the strongest features of the US economy. Outside the sharp increase during the pandemic and the rapid recovery that followed, unemployment has remained at or below 4.5% for much of the period since around 2017.
By historical standards, that represents a remarkably long stretch of relatively tight labor market conditions. Similar periods of sustained employment strength were seen during the economic expansion of the 1950s and the strong labor markets of the 1960s.
A low unemployment rate also provides an important foundation for consumer spending. Even with inflation remaining higher than many households would like, millions of Americans continue to receive regular paychecks. That income helps support spending on housing, food, transportation and other goods and services.
But the unemployment rate measures whether people have jobs, not necessarily how attractive those jobs are or how confident workers feel about finding another one. That distinction has become increasingly important as hiring has cooled.
For workers who remain employed, the labor market still offers a degree of stability. Companies have generally avoided large-scale layoffs, while unemployment claims have remained relatively low. The result is an economy where losing a job may be less common, but finding a new and better one can also take longer.
Labor force growth is losing momentum
The number of Americans participating in the labor market has become another important part of the story. For decades, the US benefited from a growing pool of people willing and able to work.
From the early 1960s onward, immigration, population growth and the increasing participation of women helped expand the nation’s workforce. That long period of growth provided businesses with a steady supply of workers and supported broader economic expansion.
The pattern was disrupted by the 2007-2009 financial crisis and recession. Some unemployed immigrants returned to their home countries, while other Americans became discouraged and left the workforce.
Today, different forces are creating new pressure. The US population is aging, birth rates remain low and immigration policy has become more restrictive under the Trump administration. Increased immigration enforcement and deportations have also raised questions about how quickly the labor force can grow.
The number of people working or actively looking for work has increased somewhat in recent months, but it remains below the record 171.5 million recorded in November 2025.
That matters because economic growth depends not only on how many people are employed, but also on whether the workforce itself continues to expand. A stagnant labor force can limit the economy’s ability to add workers even when companies want to grow.
The changing labor supply also adds another layer to the political debate over immigration. For businesses that depend heavily on immigrant labor, a smaller workforce can make recruitment more difficult and potentially increase labor costs. For policymakers, the issue is tied to broader questions about population growth, productivity and long-term economic capacity.
Hiring has slowed even as layoffs remain limited
The labor market that emerged after the pandemic was unusually dynamic. Businesses were hiring at a rapid pace as they attempted to rebuild workforces depleted during the health crisis. Workers, meanwhile, were frequently leaving jobs in search of higher salaries and better working conditions.
That period produced a historically high rate of job switching, giving employees considerable bargaining power.
That advantage has largely disappeared.
Companies are now showing relatively little interest in large-scale layoffs, but they are also taking longer to add new employees. Workers who already have jobs are consequently more likely to stay where they are, while people looking for work may face fewer opportunities than they did during the post-pandemic hiring surge.
The result is a labor market that looks stable on the surface but is considerably less active underneath.
Recent research from the Conference Board highlighted that shift. Its September survey found that fewer Americans believed jobs were plentiful, while the share saying jobs were difficult to obtain reached its highest level since January 2021, during the final month of Trump’s first presidential term.
The same Conference Board survey showed consumer confidence falling to a 12-year low. That decline is significant because perceptions of the labor market can influence household decisions even when official unemployment remains low.
For many workers, the issue is not simply whether they have a job. It is whether they can find a better-paying position, negotiate higher wages or feel confident enough to leave an existing employer.
That sense of reduced opportunity can be especially important politically. A worker who remains employed but sees fewer opportunities for advancement may judge the economy differently from someone looking only at the unemployment rate.
Manufacturing and wages show the limits of the recovery
Manufacturing provides another example of the gap between political expectations and economic reality.
Trump made the expansion of American manufacturing a central part of his 2024 presidential campaign, promising that tariffs, deregulation and other policies would help bring production and jobs back to the United States. The strategy was aimed in part at communities that had suffered from decades of manufacturing employment moving overseas.
But rebuilding manufacturing employment is difficult in an economy where productivity has steadily increased and fewer workers are needed to produce the same amount of goods.
US manufacturing employment reached roughly 19.5 million jobs at its peak in mid-1979, when manufacturing accounted for more than one in five payroll positions. The sector is far smaller today.
Manufacturing employment currently stands at about 12.6 million jobs. That is roughly 21,000 fewer positions than the number Trump inherited from President Joe Biden in January 2025, and well below the recent peak of about 12.9 million jobs reached during Biden’s presidency.
The figures illustrate how difficult it is for government policy to reverse long-term changes in the structure of the US economy. Automation, productivity gains, international trade and changes in consumer demand have all reshaped American manufacturing over decades.
Trump’s tariff policies have produced significant changes across global trade and created disruption for companies that rely on imported materials and components. But so far, they have not fundamentally changed the country’s broader employment pattern.
For working households, the more immediate concern may be wages rather than the number of factory jobs.
Inflation-adjusted after-tax income growth has remained relatively weak, with annual growth below 2% recently. In previous periods, real disposable income more commonly grew by around 3% a year.
That difference matters because disposable income represents the money households have available after taxes for spending or saving. If wages rise but prices rise nearly as quickly, workers may see little improvement in their actual purchasing power.
The combination of low unemployment, slower hiring, modest real income growth and a stagnant labor force has created an unusual economic picture heading into the midterms.
The United States is not facing the widespread joblessness associated with a recession. Instead, the problem is that the labor market has lost much of the momentum and opportunity that characterized the years immediately following the pandemic.
For Trump and Republicans, that distinction could prove important at the ballot box. A 4.2% unemployment rate offers a strong headline figure, but voters are likely to judge the economy through more personal measures, including their paychecks, household expenses, job prospects and confidence about what comes next.
The economy may still meet the traditional definition of full employment. For many Americans, however, it does not necessarily feel like an economy full of opportunity.