Leisure employers add 18,000 jobs in August

Americans are cutting back on non-essential spending as prices stay stubbornly high, and one of the job market’s most reliable engines—hiring in bars, restaurants, hotels, and travel—has started to stall. The latest data from the Labor Department shows leisure and hospitality employers added just 18,000 jobs in August, the smallest gain since January 2022. That sector had been adding about 50,000 jobs a month on average earlier this year. The slowdown mirrors what many small business owners say they’re seeing: fewer customers willing to splurge on dining out, weekend getaways, or concerts.

The shift comes after two years in which Americans splurged on experiences after pandemic lockdowns ended. Wages grew, savings piled up, and people were eager to travel and eat out again. But inflation—still running above 3 percent for core services—has eroded those gains. Many households now say they’re prioritizing necessities like groceries and rent, leaving less room for discretionary spending. Credit card data from Bank of America shows spending on restaurants and travel is growing at the slowest pace in more than a year. Economists warn that if this trend continues, it could ripple through the broader economy, because leisure and hospitality is one of the first sectors to react when wallets tighten.

The slowdown is already visible in real time. Restaurant chains like Olive Garden and Chili’s report softer same-store sales. Hotel occupancy rates dipped in major cities over the summer. Staffing agencies say requests for temporary workers in hospitality have fallen by about a quarter compared with last year. Some workers who once counted on tips and flexible hours are finding shifts cut or schedules trimmed. The Labor Department also revised down job gains for June and July by a combined 86,000, showing the slowdown started earlier than the August numbers suggest.

If inflation stays high or rises again, more employers could freeze hiring or cut jobs. That could push the unemployment rate up from its current 4.3 percent, especially in states like Nevada and Hawaii where leisure and hospitality make up a large share of the economy. Economists say the Federal Reserve is closely watching this sector as it decides whether to cut interest rates later this month. A sustained pullback in hiring here would signal that the economy is cooling faster than policymakers expected—and that Americans’ willingness to spend, one of the main drivers of growth, is wearing thin.