The Federal Reserve Board published a research note assessing demographic-driven changes in the US potential labor force and concluding that labor force growth could slow to near zero in 2026. It attributes the slowdown to unusually weak population growth linked to lower net immigration and to a declining potential labor force participation rate as the population ages, and highlights implications for monthly employment readings and the sources of economic growth. The analysis estimates the pool of available workers could increase by less than 10,000 people per month in 2026, versus average potential labor force growth of about 1.4% per year since 1960. With labor supply growth this low, the breakeven pace of employment growth needed to keep the unemployment rate steady could fall to nearly zero, making negative monthly job growth almost as likely as positive job growth and leaving scope for payroll declines of around 100,000 in a month even if output is growing at the potential rate. On the output side, the note finds that if potential employment growth is near zero, any growth in potential GDP in 2026 would need to come entirely from labor productivity, representing a departure from the historical mix of labor input and productivity contributing to potential GDP growth.
Federal Reserve Board 2026-04-02
Federal Reserve Board research note projects near-zero US labor force growth in 2026, pushing breakeven job gains toward zero and making potential GDP growth depend on productivity
The Federal Reserve Board published research indicating that demographic trends could slow US potential labor force growth to near zero in 2026, driven by weak population growth from lower net immigration and declining participation as the population ages. The note finds the pool of available workers may increase by fewer than 10,000 people per month, implying a breakeven employment growth rate near zero and making negative monthly job growth as likely as positive. It concludes that if potential employment growth is near zero, potential GDP growth in 2026 would need to be driven entirely by labor productivity.