Job market has rebounded in 2026. Economists say firms went too far “right sizing” 2025

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The hiring freezes and selective layoffs of 2025 also appear to have gone too far. Companies are realizing demand is holding up fairly well, and AI a) can’t replace most workers yet and b) AI is expensive in the business world. It requires ongoing subscriptions and cloud storage buildout (another subscription), not just one-time investment. This explains why professional and business services — a good barometer of “white-collar jobs” — has added 56,000 net employees in the past three months. It also helps explain the large jump in companies posting job openings this spring (especially in professional and business services) as they re-assess their headcount and needs. Similarly, manufacturing appears to be slowly coming out of the slump it’s been in for the past several years.

It’s encouraging news to see hiring pick up again. The class of 2026 is going to have an easier time finding a job than the class of 2025 did. But what’s going on underscores how reliant this economy is right now on spending by the rich and the AI boom. And that’s unsettling, especially given the other big market/econ news at the end of the week — “Black Friday” in South Korea. Investors swiftly pulled out of Samsung Electronics and SK Hynix, two darlings of the AI trade. The South Korean stock market is smaller and more concentrated than the U.S., but it’s a reminder that a lot is riding on how flush the wealthy feel.

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