Barclays says the U.S. labor supply has materially weakened since the January 2026 population-control update, with labor-force growth falling by more than population growth, and it expects those pressures to persist as immigration slows and the population ages. In a recent note, the firm says its estimates built from CPS microdata show a much sharper deterioration in labor supply than the published labor-market aggregates, with labor-force gains from January through August 2026 averaging declines of nearly 100k per month. Barclays attributes the slowdown primarily to population and immigration dynamics, noting that noncitizen population growth has declined sharply while noncitizen labor-force growth has turned negative on average, though it says the deterioration in labor-force growth has been broader than that, with citizen labor-force growth also weakening. The firm adds that labor-force participation changes are playing an important role, with the rise in nonparticipation coming entirely from people who say they do not want a job, and it expects neither the demographic nor the behavioral forces to reverse meaningfully. Barclays concludes that the pace of payroll growth consistent with stable unemployment could remain at or below zero for an extended period, allowing even modest job gains to sustain labor-market tightness and wage pressures, with significant consequences for the labor market and the Fed.
Barclays PLCBarclays' own research note on a tight US labor market and its implications for the Fed; no direct financial impact on Barclays stated
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