A little-known economic indicator just flashed a warning signal that has Federal Reserve officials on edge.
The Conference Board’s job availability index dropped sharply in January to its lowest level since early 2021. If you’re not familiar with this metric, you should be—it’s proven to be a reliable leading indicator of where unemployment is heading next.
And right now, it’s pointing in the wrong direction.
What Just Happened in January
Vice Chair Michelle Bowman flagged this development in her recent speech, and her concern was palpable. The Conference Board job availability index—which tracks how easy or difficult it is to find work—plummeted to levels we haven’t seen in nearly four years.
To put this in context, early 2021 was when the economy was still recovering from pandemic lockdowns. Job openings were scarce. Unemployment was elevated. The labor market was struggling.
Sound familiar? It might soon.
Why This Index Matters More Than You Think
Most people watch the monthly unemployment rate. That makes sense—it’s the headline number that gets all the attention. But here’s the problem: unemployment is a lagging indicator. It tells you what already happened, not what’s coming.
The Conference Board’s job availability index is different. It’s a leading indicator. It measures current job market conditions from the employer side—how many jobs are available, how hard companies are trying to fill positions, how much demand exists for workers.
When this index drops sharply, unemployment typically rises in the following months. The relationship isn’t perfect, but the pattern has held consistently over multiple economic cycles.
That’s why Bowman specifically mentioned it: “Moreover, the Conference Board job availability index dropped sharply in January to its lowest value since early 2021, suggesting that the unemployment rate could move back up in the first quarter.”
She’s not speculating. She’s reading the warning signs.
The Current State of Unemployment
Here’s where things get tricky. The unemployment rate actually edged down to 4.4% in December and has been moving sideways in recent months. On the surface, that looks stable.
But Bowman isn’t buying the stability narrative. And the Conference Board data helps explain why.
Let’s look at what’s really happening beneath that 4.4% number:
| Labor Market Metric | Current Status | Trend |
|---|---|---|
| Unemployment Rate | 4.4% (December) | Sideways (but up 0.25% since mid-2025) |
| Private Payroll Growth | 30,000/month (Q4) | Significantly below stable level |
| Conference Board Index | Early 2021 lows | Sharp decline in January |
| Job Gains Concentration | Healthcare only | Extremely narrow |
| ADP Weekly Data | Subdued pace | Continuing weakness into January |
That’s not the picture of a stable labor market. That’s a labor market hanging on by a thread.
What “Early 2021 Lows” Really Means
Let’s revisit what the job market looked like in early 2021:
January 2021 conditions:
- Unemployment rate: 6.3%
- Labor force participation: Still depressed
- Job openings: Limited
- Hiring activity: Weak and uncertain
- Economic outlook: Recovery underway but fragile
We’re obviously not back in that situation entirely. Unemployment is much lower now. But the job availability index reaching those levels suggests demand for workers is shrinking at a similar pace.
And here’s the uncomfortable truth: when job availability collapses this quickly, unemployment doesn’t stay low for long.
The Leading Indicator Pattern
Historical patterns show a clear sequence:
- First: Job availability drops (← We are here)
- Then: New job openings slow dramatically
- Next: Hiring freezes become widespread
- Finally: Layoffs begin and unemployment rises
The Conference Board index is flashing step one. Bowman’s other data points confirm steps two and three are already underway. The only question is whether step four follows.
“The labor market has become increasingly fragile over the past year and could continue to deteriorate in the near term,” Bowman warned. “Despite some tentative signs of the unemployment rate leveling off, it seems too early to say that the labor market has stabilized.”
Why the Fed Is So Concerned
Normally, a 4.4% unemployment rate wouldn’t trigger alarm bells. That’s actually quite low by historical standards. But the Fed isn’t looking at where unemployment is—they’re looking at where it’s going.
Bowman pointed to several additional warning signs that align with the Conference Board signal:
Private payroll employment growth: Slowed to just 30,000 per month in the fourth quarter. That’s well below the level necessary to keep unemployment stable. For context, you typically need 100,000+ jobs per month just to absorb new workers entering the labor force.
Job gains concentration: All private sector job gains last quarter came from healthcare. That’s not broad-based growth. That’s one industry carrying the entire labor market.
Weekly ADP data: Shows job gains remaining at a “subdued pace” through early January. The weakness isn’t just a fourth-quarter blip—it’s continuing.
Low-hiring, low-firing dynamic: Companies aren’t laying people off aggressively (yet), but they’ve also stopped hiring. This creates what some economists call a “jobless expansion”—GDP grows, but employment doesn’t.
Add the Conference Board’s sharp January drop to this mix, and you get a labor market teetering on the edge.
The Data Quality Wild Card
There’s one major complicating factor: we can’t fully trust the recent data.
The government shutdown created significant statistical noise in employment reports. Even more concerning, the CPS (Current Population Survey) response rate—the survey that produces the unemployment rate—has dropped below pandemic lows.
When fewer people respond to the survey, the reliability of the results declines. You’re working with a smaller, potentially less representative sample.
Bowman acknowledged this directly: “It seems too early to say that the labor market has stabilized, especially with the added statistical noise from the government shutdown and the sharp drop in the CPS survey response rate to below the pandemic lows.”
So here’s the paradox: The Conference Board index is screaming warning, but the unemployment data might be too unreliable to show the full picture yet.
What Comes Next: Three Scenarios
Based on Bowman’s assessment and the Conference Board signal, here are the likely paths forward:
Scenario 1: Soft Landing Holds (30% probability)
The January drop in the Conference Board index proves to be a one-month anomaly. Hiring stabilizes in the first quarter. Unemployment hovers around 4.4% through spring. The Fed proceeds with measured rate cuts as planned.
Scenario 2: Gradual Deterioration (50% probability)
The Conference Board signal proves accurate. Unemployment drifts up to 4.7%-4.9% by mid-year. Job growth remains concentrated in few sectors. The Fed accelerates rate cuts in response, possibly going beyond three cuts.
Scenario 3: Sharp Downturn (20% probability)
The “low-hiring, low-firing” dynamic breaks. Companies begin reassessing staffing needs. Layoffs accelerate. Unemployment jumps quickly toward 5.5%+. The Fed cuts rates aggressively, potentially including 50-basis-point moves.
Bowman’s comments suggest she sees Scenario 2 as most likely but is preparing for Scenario 3: “With a less dynamic low-hiring, low-firing labor market, we could see layoffs rise quickly if firms begin to reassess their staffing needs in response to weaker activity.”
The Layoff Announcements Nobody’s Talking About
Here’s another data point that aligns with the Conference Board warning: private job cut announcements increased considerably throughout 2025.
Bowman noted: “There has been news of significant additional layoffs in January, as we heard this week from two large employers.”
These announcements don’t show up in the unemployment rate immediately. There’s typically a lag between when layoffs are announced and when they’re fully implemented. But they signal that companies are already making those difficult staffing decisions.
When you combine rising layoff announcements with plummeting job availability, you get a clearer picture of what’s happening: companies are simultaneously cutting positions AND not backfilling open roles.
That’s a recipe for rising unemployment.
What This Means for Workers
If you’re employed right now, here’s what the Conference Board signal suggests:
Short term (Next 3 months):
- Job openings will likely continue declining
- Switching jobs will become harder
- Wage growth may slow
- Companies will be more selective in hiring
Medium term (3-6 months):
- Unemployment could tick up toward 4.7%-5.0%
- Certain industries may see increased layoffs
- Job security becomes more variable across sectors
What to do:
- Don’t assume current conditions will last
- Build emergency savings if possible
- Strengthen your position in your current role
- Be cautious about job changes unless opportunity is compelling
If you’re job hunting, the Conference Board drop means competition for available positions is likely to intensify before it improves.
The Fed’s Dilemma
This is why Bowman supports three rate cuts in 2026 despite inflation still running somewhat above target. The labor market risk outweighs the inflation risk in her assessment.
“Downside risks to the labor market have not diminished, and we should not overemphasize the latest reading on the unemployment rate,” she emphasized.
The Conference Board data validates her concern. When a leading indicator hits four-year lows while the unemployment rate sits at 4.4%, you don’t wait until unemployment jumps to 5.5% before responding. You act preemptively.
That’s what those three planned rate cuts are: insurance against the scenario the Conference Board index is warning about.
History’s Warning
Bowman included one of the most sobering lines in her entire speech: “History tells us that the labor market can appear to be stable right up until it isn’t.”
This isn’t abstract theorizing. It’s pattern recognition from someone who has studied decades of economic cycles.
Labor markets don’t typically deteriorate gradually and predictably. They often look fine, then turn quickly. The unemployment rate can appear stable for months while underlying conditions weaken—and then jump sharply in just a quarter or two.
The 2008 financial crisis followed this pattern. So did the 2001 recession. The labor market looked reasonably healthy until suddenly it didn’t.
Leading indicators like the Conference Board index exist precisely to spot those turning points before they show up in the unemployment rate.
What to Watch in Coming Months
Here are the data points that will tell us whether the Conference Board warning plays out:
| Indicator | Current Level | Watch For | What It Signals |
|---|---|---|---|
| Unemployment Rate | 4.4% | Rise above 4.6% | Deterioration confirmed |
| Monthly Payrolls | 30,000 (private) | Negative prints | Recession risk |
| Conference Board Index | Early 2021 lows | Further decline | Acceleration of weakness |
| Initial Claims | Low | Sustained rise above 250K | Layoffs beginning |
| Job Openings (JOLTS) | TBD | Continued decline | Demand weakness |
The February and March employment reports will be critical. If unemployment rises even modestly while the Conference Board index stays depressed, expect the Fed to move quickly on rate cuts.
The Bottom Line
The Conference Board’s job availability index just signaled that the labor market is weaker than the 4.4% unemployment rate suggests. Historical patterns indicate unemployment typically rises in the months following sharp drops in this index.
Federal Reserve officials are taking this signal seriously. It’s part of why Vice Chair Bowman is planning three rate cuts for 2026 despite inflation still running above the 2% target.
For workers, the message is clear: the job market that felt relatively stable through late 2025 may be entering a more challenging phase. Job availability is declining. Hiring has slowed dramatically. And leading indicators are flashing caution.
Whether this translates into meaningfully higher unemployment depends partly on how quickly the Fed responds with rate cuts—and partly on factors beyond monetary policy control.
But one thing is certain: when the Conference Board index hits early 2021 lows, it’s not a signal to ignore. It’s a warning to prepare for change.
The labor market isn’t in crisis. Not yet. But it’s not stable either, regardless of what the unemployment rate temporarily suggests.
And that distinction might be the most important economic story of early 2026.
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