Moody's Chief Economist Warns: Strong U.S. Job Growth in January Is Unsustainable

The U.S. Bureau of Labor Statistics released its delayed January employment report on Wednesday, showing that the U.S. economy added 130,000 jobs in the first month of 2026, exceeding economists' expectations.

However, Moody's Chief Economist Mark Zandi cautioned not to be misled by these optimistic figures and to remain vigilant.

This number is well above the 75,000 jobs economists had expected, but Zandi does not believe this growth trend will continue.

Zandi has previously warned multiple times that the U.S. economic fundamentals are fragile and that a recession is possible. On Wednesday, he posted on X that the latest employment data has done nothing to alleviate his concerns.

He said, "The job market remains fragile and highly susceptible to shocks. Yes, employment increased by 130,000 in January, but given the significant downward revisions to historical data, there has been no job growth since last April (Liberation Day)."

Zandi also pointed out that almost all of January's employment growth came from the healthcare industry, which he believes is not a good sign for the overall U.S. economy.

He stated, "Without healthcare, the economy would have seen a substantial decline in jobs, and the unemployment rate would have risen further. There are good reasons why the healthcare sector is creating jobs, but this also shows how vulnerable the job market and economy would become if there were issues in healthcare or if the pace of hiring slowed."

This is not his only concern. Zandi also warned that the fragile labor market could be further harmed by the impact of artificial intelligence, a situation he believes is rapidly intensifying. While the impact of AI has yet to be reflected in macroeconomic data, Zandi thinks this is likely to change in the near future.

The economist added that he believes an increase in corporate layoffs will be the clearest sign that cracks are beginning to appear in the labor market. Companies like Amazon, Meta, and Pinterest have recently announced large-scale layoff plans, and the number of layoffs across the economy last month reached its highest level since 2009.

Zandi said, "The best real-time indicator to measure layoffs is the number of initial unemployment insurance claims filed each week. Currently, this number is around 225,000, which is relatively low. If weekly claims consistently exceed 250,000, then there will be problems in the job market."

Editor: Yu Jian SF069