# Weak hiring is the bigger jobs risk as AI construction spending limits near-term recession threat

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/insights/44525
Published: 2026-10-30T10:22:08.000Z
Updated: 2026-10-30T10:22:08.000Z
Section: Insights & Views

> Eric Basmajian says weak hiring is the main U.S. labor market problem. AI data center spending is supporting construction and manufacturing jobs, limiting near-term recession risk.

Weak hiring is the main strain in the U.S. labor market, while AI data center investment is supporting construction and manufacturing employment and keeping near-term recession risk low.

In an interview with David Lin on October 29, Eric Basmajian, founder of EPB Research and an economist, said jobless claims, monthly employment reports and the Bureau of Labor Statistics' job openings and labor turnover data pointed to layoffs below pre-pandemic levels alongside exceptionally weak hiring.

Basmajian highlighted the ratio of continuing unemployment claims to initial claims, which he uses to estimate how long people remain on benefits and gauge their return to employment. The measure stood at 8.7 weeks, had risen since 2023 and was higher than 88% of readings since 1967, including recession periods, he said.

Companies' use of attrition also helps explain the gap between low layoffs and difficult hiring conditions, he said. Employers are leaving positions unfilled when workers quit or retire. Workers who accept Microsoft's voluntary buyout offers would be classified as voluntary departures rather than layoffs, he noted.

That weakness falls particularly heavily on younger workers entering the labor market, Basmajian said. College graduates without previous employment depend entirely on companies hiring. Conditions vary by sector, but workers who lose their jobs may also take longer to find another position than they would have historically, he added.

Basmajian was cautious about arguments that white-collar job losses could lead the next recession. Historically, he said, monetary tightening first affects interest-rate-sensitive construction and manufacturing, with job losses subsequently spreading pressure to services and white-collar employment. He said there was no evidence yet that white-collar losses were large enough, or had sufficient spillover effects, to cause an economy-wide downturn.

Construction and manufacturing employment instead supported his assessment of low near-term recession risk. Residential construction jobs were down about 1% from a year earlier, but nonresidential construction had added more than 100,000 jobs over the past year, mostly related to data centers, he said. Demand for transportation, business and cooling equipment was also supporting manufacturing, with durable goods manufacturing employment beginning to rise over the past six to eight months.

Declining construction and manufacturing employment has historically been a major recession signal, but the current trend runs in the opposite direction, Basmajian said. He assessed recession risk in the very near term as low, while identifying residential construction, where employment continued to fall modestly, as an area to watch.