US sidelined workers exceed 2008 crisis levels at 6.2 million

The number of Americans not in the labor force who currently want a job rose to 6.2 million in May, exceeding levels recorded during the 2008 Financial Crisis. Analysis by The Kobeissi Letter indicates that labor market conditions are deteriorating beneath the surface, with this specific demographic of hidden job seekers surging by 1.2 million since March 2023.

In May alone, the count of sidelined workers increased by 76,000, marking the fourth consecutive monthly rise. This trend has added a total of 349,000 people to the category in recent months. As a percentage of total employment, this shadow group reached 3.8%, the second-highest rate since October 2021.

Comparison to Historical Recessions

The current 3.8% rate is already higher than the 3.6% peak witnessed during the 2001 recession. It is approaching the 4.3% high watermark of the 2008 economic crash. These individuals are not actively looking for work, meaning they do not trigger official unemployment alarms, yet their growing ranks are significant.

Metric	Value	Context
Total sidelined workers (May)	6.2 million	3rd highest since July 2021
Monthly increase (May)	76,000	4th consecutive monthly rise
Increase since March 2023	1.2 million	Surged past 2008 crisis levels
% of total employment	3.8%	2nd highest since October 2021

Market Performance

Despite the weakening labor data, major US indices showed gains year-to-date. The S&P 500 index advanced 8.35%, while the Nasdaq Composite index was up 11.42% and the Dow Jones gained 5.83%.

The SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ) closed higher on Friday. The SPY ended up 0.54% at $741.75, while the QQQ was higher by 0.59% to $721.34. The State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA) closed 0.73% higher.

A senior U.S. official clarified that Israel's withdrawal from Lebanon is not a condition of the newly announced Iran deal, though Israel retains the right to defend itself against attacks from Hezbollah. The official stated that sanctions relief is not tied to any particular conduct but is contingent upon Iran "acting appropriately." This clarification follows President Donald Trump's announcement of a framework agreement to end the conflict with Iran, which authorized the immediate toll-free opening of the Strait of Hormuz and the removal of the United States naval blockade.

The initial announcement triggered a significant market reaction, with US stock futures surging and global oil prices tumbling as investors priced in the de-escalation of geopolitical tensions. Dow futures rose 380.00 points, or 0.74%, to 51,607.00, while S&P 500 futures gained 72.25 points, or 0.97%, to 7,507.25 and Nasdaq 100 futures advanced 480.25 points, or 1.62%, to 30,142.25. In commodities, WTI crude oil fell 4.61% to $80.97 per barrel, while Brent crude declined 3.92% to $83.91 per barrel.

Key Deal Parameters

The finalized agreement encompasses several critical elements aimed at ensuring economic continuity and ending hostilities:

Parameter:	Details
Deal Status	Complete per President Trump
Strait of Hormuz	Authorized immediate and permanent toll-free opening
Naval Blockade	Immediate removal of US blockade authorized
Ceasefire Scope	Immediate and permanent cessation of military operations
Israel's Withdrawal	Not a condition of the deal per senior U.S. official
Sanctions Relief	Tied to Iran "acting appropriately"

Diplomatic Developments

Trump stated on Truth Social, "Ships of the World, start your engines. Let the oil flow!" The announcement followed mediation efforts, with Pakistani Prime Minister Shehbaz Sharif confirming a breakthrough had been reached. A memorandum of understanding is expected to be formally signed in Switzerland on Friday. Iran’s Supreme National Security Council stated that all military operations, including those in Lebanon, would permanently cease beginning Monday night.

US Vice President Vance provided further details in a CNBC interview, outlining a two-step verification process for the agreement. He stated the expectation that the Strait of Hormuz would remain open toll-free in the long term. Vance acknowledged that many details still need to be sorted out and indicated that the administration is waiting to see where Tehran is willing to make concessions. Regarding the upcoming signing, Vance said the US expects the Speaker of the House, the Foreign Minister, and others to represent Iran. He added that there are elements in Israel that like the deal and that Israel will have a seat at the table in the new Middle East. The administration hopes to release the text of the agreement this week.