US Labor Force Growth Expected to Stall Five Years Amid Demographic, Policy Shifts

David Kelly, chief global strategist at JPMorgan Asset Management, has warned that the U.S. labor market may experience zero growth in workers over the next five years due to demographic shifts and changes in immigration policy. About half of the workforce decline is attributed to Americans entering retirement, while the other half results from a drop in labor participation among people aged 18 to 54. Recent labor data reinforce these concerns, with downward revisions in job creation for May and June totaling 258,000 jobs and a July increase of only 73,000 jobs, far below expectations. The labor force participation rate declined from 62.65% in July 2024 to 62.22% in July 2025, equating to nearly 1.2 million fewer people working or seeking work. Kelly emphasized that this labor market tightness presents significant challenges for the Federal Reserve, urging exceptional caution before any interest rate cuts due to the risk of exacerbating inflation. These developments raise broader concerns about the U.S. economy's growth potential and the risk of recession amid weakening labor market performance.