The economy might look steady right now—but according to one top economist, the calm could be deceiving.
As government data sources remain frozen during the ongoing shutdown, economists are left navigating a murky financial landscape with far fewer indicators than usual. Yet Thomas Simons, chief U.S. economist at Jefferies, believes there are still a couple of clear warning lights flashing—both coming from the labor market.
Simons isn’t ready to sound the alarm on a recession just yet, but he’s keeping a close eye on two trends that, in his view, could hint at trouble ahead. Speaking with Business Insider, he explained that the biggest issue is the loss of critical government data that economists normally rely on to gauge economic health. Still, before the data blackout began, he had noticed two particular shifts that raised red flags.
“The two biggest red flags I was starting to see were lower participation rates and rising unemployment among certain age groups,” Simons noted.
And here’s where it gets intriguing: the groups he’s most concerned about couldn’t be more different in age. On one end are recent college graduates in their early twenties, struggling to establish careers. On the other are older professionals, roughly ages 55 to 65, facing new forms of workplace displacement—often tied to technological change and automation. It’s a tale of two generations, both feeling squeezed by forces beyond their control.
Simons sees this dual pressure as particularly worrying. Young workers represent the future labor supply, yet if they can’t find meaningful jobs early on, they risk longer-term career stagnation. Meanwhile, older workers losing their foothold in the workforce can hit consumer spending much harder—because unlike new graduates, they tend to have higher incomes and bigger household budgets. When that spending power vanishes, the ripple effects through the economy can be swift and painful.
“Demographics suggest we’re not seeing a surge of new entrants into the labor force,” Simons explained. “More people are retiring than graduating into the job market.” That imbalance may create a hollow labor market—one that looks solid in headline data but is quietly weakening beneath the surface.
Think of it as an iceberg scenario: stability visible above the waterline, but hidden erosion below. If overall demand softens or employers slow down hiring even slightly, that fragile base could crack fast.
Simons also drew a stark contrast between the two ends of the age spectrum. Younger workers, he said, typically don’t have enough purchasing power to move economic indicators substantially. But older workers do. “If those older employees actually start losing jobs,” he warned, “it’ll show up in the data almost immediately.”
Interestingly, he notes that much of the middle-aged workforce—those in their thirties and forties—still appears stable. That may explain why headline employment figures have yet to reflect any serious downturn. But, he cautions, the extremes of the labor market are much shakier than they seem, and cracks there could eventually widen into something much bigger.
So what do you think? Are we witnessing the first signs of a hidden labor-market fracture, or just temporary growing pains no one should overthink? Should policymakers pay more attention to these vulnerable groups before the damage spreads? Share your take—this is one debate that could define the next economic chapter.
