Federal labor market data issued Tuesday suggests the frozen U.S. job market may be starting to thaw — but the economic fallout from the Iran war threatens to stall that momentum, according to labor economists.
“Is the hiring recession finally over? There are encouraging signs,” Heather Long, chief economist at Navy Federal Credit Union, wrote in an e-mail.
“The big concern is the war in Iran could halt that much needed progress in the labor market,” she wrote.
Job market ‘may be stabilizing’
The labor market has been in a so-called “low hire, low fire” mode for more than a year, characterized by a low rate of hiring, layoffs and voluntary quits among workers.
The result was a frozen market that offered few opportunities to job seekers or new entrants to the labor pool — a stark turnaround from the “great resignation” era of 2021 and 2022, when job openings hit all-time highs and workers left their jobs for new opportunities in record numbers, economists said.
However, there have been recent signs of a pickup in activity, likely a byproduct of businesses feeling more certainty about economic policies like tariffs and interest rates, said Nicole Bachaud, a labor economist at ZipRecruiter.
The hiring rate among employers jumped to 3.5% in March 2026 — the fastest pace of hiring in two years and up from 3.1% in February, according to data published Tuesday by the U.S. Bureau of Labor Statistics.
When examining the three-month average of the hiring rate, it is “essentially flat from where it entered the year — suggesting it has potentially found a bottom after four years of declines,” Matthew Martin, a senior U.S. economist at Oxford Economics, wrote in a research note Tuesday.
Hiring also occurred in industries other than healthcare for “the first time in a long time,” Long wrote.
