New College Graduates Face Tight Job Market amid Federal Cuts and Economic Uncertainty

Recent college graduates are entering a job market marked by rising unemployment, fewer openings, and heightened competition, according to recent data and labor market experts.

The unemployment rate for recent college graduates rose to 5.8% in March, up from 4.6% a year earlier, the Federal Reserve Bank of New York reported in April. At the same time, job postings on the campus recruiting platform Handshake have dropped 15%, while applications have surged by 30%.

Woman looking for a job in the newspaper | Source: Pexels

“There’s a lot of uncertainty and certainly a lot of competition for the current graduates that are coming into the job market,” said Christine Cruzvergara, chief education strategy officer at Handshake.

One contributing factor is the impact of federal job cuts. According to Evercore ISI, an estimated 350,000 federal employees have been affected by staffing reductions, representing approximately 15% of the federal workforce. The reductions follow hiring freezes and layoffs announced under President Donald Trump’s administration.

“The federal government is one of the largest employers in this country, and also one of the largest employers for entry-level employees as well,” said Loujaina Abdelwahed, senior economist at Revelio Labs.

People graduating | Source: Pexels

Additional job market uncertainty stems from shifting tariff policies and the growing influence of artificial intelligence. A majority of 2025 graduates—62%—express concern over AI’s impact on job prospects, according to a Handshake survey, up from 44% two years ago.