Job openings are low and hiring is weak. Why the U.S. labor market won’t get better soon.

The U.S. labor market is cooling on two fronts at once: job openings have fallen and hiring has weakened, a combination that points to softer demand for workers rather than a temporary lull. Several forces are cited as weighing on job creation, including geopolitical conflict, elevated gasoline prices, rising interest rates and the spread of artificial intelligence.

Each channel works differently. Higher borrowing costs tend to slow the business investment that underpins new roles, while energy costs and conflict can dampen confidence and spending. AI, meanwhile, may be reshaping which roles employers prioritize, even as it creates demand elsewhere.

For markets, the key question is what a softer labor market means for wages, consumer spending and the interest-rate path. Watch upcoming openings and payroll data, along with how policymakers interpret the slowdown. A labor market that stays weak without collapsing would mark a meaningful shift from the tight conditions of recent years — one with implications across rates, equities and credit.