The United States labor market is starting to see the strain as we get closer to the end of 2025. Surprisingly weak this year, as recent reports have suggested, is an understatement of the expected job gains. This ongoing trend has worried economists and policymakers alike. David Michael Tinsley, a senior economist at Bank of America Institute, pointed out that the labor market has become increasingly uneven since President Donald Trump’s significant tariff announcement in April 2025. As the Bureau of Labor Statistics prepares to release its latest snapshot of the labor market on Friday at 8:30 a.m. ET, expectations surrounding the final jobs report of the year remain highly uncertain.
Economists are mixed in their expectations for this report, with guesses all over the map. FactSet’s consensus estimates predict a small decline in the unemployment rate. It is forecast to fall, after recently peaking at a four-year high of 4.6% in November. 2025 forecast for new job creation – not a rosy picture. Projected job gains are at only 710,000, which would be one of the weakest years for employment growth in decades.
Unequal Job Gains Across Sectors
Looking ahead to April through November 2025, we see the picture flip flopped—some sectors are booming. Specifically, healthcare and leisure and hospitality have added jobs at an impressive pace compared to the overall labor market. Unsurprisingly, these sectors are some of the largest, collectively comprising about 22% of total employment. Shockingly, they were responsible for an astounding 84% of all net new jobs between January and November.
Nela Richardson, chief economist at ADP, added that hiring in 2025 dropped off a cliff. It was the worst performance for any quarter outside of a recession since 2003. She noted that while healthcare services are essential, they tend to be costly for consumers, and leisure and hospitality spending is often discretionary. This duality is the definition of a “K-shaped economy,” in which spending continues to be led by higher-income earners while lower-income workers face pain.
“Health services is an expensive type of service for most consumers; leisure and hospitality [spending] is a discretionary service for all consumers.” – Nela Richardson
Richardson’s analysis reveals that these sectors are prospering thanks to their dependence on high-income consumers. This captures the theme of increasing economic inequality in the modern labor market.
Signs of Hesitancy in Hiring
According to recent data from the Bureau of Labor Statistics that drop-off has been dramatic. It has tanked to its lowest rate in more than a decade. Businesses reported looking for fewer workers in November, raising the stakes for a highly uneven and toxic employment landscape. Although layoff activity remained muted in November, employers nonetheless continued to keep workers on edge by announcing intentions to enact a jaw-dropping 35,553 layoffs. This is the highest rate since November 2022.
Yet a December national survey published by the nonprofit Family Promise shows that the expectation of losing one’s job has suddenly jumped through the roof. That’s the most since April of 2025. Indeed, as seen in the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations, the likelihood of securing new employment opportunities has plummeted. Now they’re down to a record low of only 43.1%.
Andy Challenger remarked on the recent trends, stating, “The year closed with the fewest announced layoff plans all year. While December is typically slow, this coupled with higher hiring plans is a positive sign after a year of high job-cutting plans.”
The truth is many continue to view the labor market as an “exclusive club.” As a consequence, people are forced to wait longer before getting placed into a job.
A Cautious Outlook Ahead
Tinsley still has a lot of reasons for guarded optimism when it comes to the future of the American labor market. He warned that the firm could still be living in a “low-hire or low-fire posture.” The good news, according to him, is that there are some indications that the worst may be over.
“While the labor market still is arguably in a low-hire or low-fire mode, it does look – in our data – as though the worst of the slowdown could be behind us.” – David Michael Tinsley
Major hurdles remain. With growing consumer demand for stable jobs and increasing economic divide between industries, 2025 will surely be a challenging reality for American workers.