Economist Mark Zandi argued that the June employment report painted an overly optimistic picture of the U.S. labor market, saying several underlying indicators point to a much weaker economy than the headline figures suggest.

Zandi Flags Weakness In June Jobs Report

On Sunday, in a series of posts on X, Zandi said commentary surrounding the June jobs report was "much too dismissive of how weak the numbers looked, all the noise in the data notwithstanding."

I was away last week and didn’t have a chance to weigh in on the June employment report. But even though belated, I can’t help myself, as I thought the commentary was much too dismissive of how weak the numbers looked, all the noise in the data notwithstanding.

— Mark Zandi (@Markzandi) July 12, 2026

Zandi noted that payroll employment posted only a modest gain in June, while prior months’ job gains were revised downward.

He also said most of the hiring came from the healthcare sector rather than being broadly distributed across the economy.

"Not only did employment as measured by the payroll survey post a small gain in the month, but previous month’s gains were revised much lower, and the bulk of the job gains were in healthcare," Zandi wrote.

He also pointed to weakness in the household survey, saying employment "fell sharply again, as it has all year."

Not only did employment as measured by the payroll survey post a small gain in the month, but previous month’s gains were revised much lower, and the bulk of the job gains were in healthcare. And employment as measured by the household survey fell sharply again, as it has all…

— Mark Zandi (@Markzandi) July 12, 2026

Zandi argued that the decline in the unemployment rate was misleading because it coincided with a sharp drop in labor force participation.

"The unemployment rate ticked lower, but only because labor force participation is in free-fall," he wrote.

He added that participation has declined across most demographic groups, particularly among workers under 35.

The unemployment rate ticked lower, but only because labor force participation is in free-fall. Participation is down across most demographic groups, especially among workers under 35. Employment-to-population ratio for prime-age workers also fell. The declines are surely…

— Mark Zandi (@Markzandi) July 12, 2026

He further cited his "vicious-cycle measure," which adjusts unemployment for trend labor force participation, saying it rose above 5% in June.

"Without the outsize decline in participation, unemployment would be over 5%," he wrote.

You may recall our vicious-cycle measure, which adjusts the unemployment rate for trend labor force participation. It rose to over 5% in June. That is, without the outsize decline in participation, unemployment would be over 5%. As I said, the commentary on the June report was…

— Mark Zandi (@Markzandi) July 12, 2026

Economists Question Weak June Jobs Data

Earlier, Laura Ullrich of Indeed Hiring Lab said the decline in labor force participation may reflect a shrinking worker supply rather than weaker hiring demand, arguing employers could still be seeking workers but facing fewer available candidates.

Her comments came after the June jobs report showed only 57,000 jobs added, with the participation rate falling to 61.5%.

ARK Invest CEO Cathie Wood also questioned the report, calling the data "weird" and arguing that government labor statistics appeared distorted due to differences between payroll and household surveys.

She advocated using more private-sector data to better assess labor market conditions.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo Courtesy: Krakenimages.com on Shutterstock.com