The U.S. job market has turned into an “exclusive club” for many, as it now takes months for individuals to secure employment. The Bureau of Labor Statistics will release the final jobs report for 2025 this very Friday. This announcement has ushered in a storm of confusion regarding the underlying health of our labor market. Economists’ projections for this report ranged widely, illustrating a deep uncertainty about the direction of hiring in the months ahead.
In November, American employers slashed their recruitment of fresh help with reckless abandon. This resulted in a hiring activity crashing down to its lowest point in over a decade (excluding the pandemic years). The unemployment rate is projected to fall by a notch to 4.5%. This comes on the heels of a four-year high of 4.6% set in November. Per consensus estimates, 55k jobs were added in December. Many experts are cautioning that this is an increase that won’t break the continuing narrative of lackluster job growth experienced all of 2025.
This year, net job growth is now expected to total just 710,000. This is the smallest annual growth in jobs in over three decades, second only to 2020. In December, U.S. businesses announced the least amount of job cuts in 17 months. This is at least a sign that the market is starting to stabilize somewhat.
The labor landscape has only gotten more lopsided since April 2025, shortly after President Donald Trump’s first major tariffication. That incredible momentum is now set against a backdrop of the most difficult hiring conditions for job seekers outside of a recession since at least 2003.
From January through November 2025, the health care and leisure and hospitality sectors surpassed net job additions across the entire labor market. These sectors led a remarkable 84% of the net new job growth during this timespan. They represented just over 22% of total employment.
“Health services is an expensive type of service for most consumers; leisure and hospitality [spending] is a discretionary service for all consumers.” – Nela Richardson, chief economist at payroll company ADP
These trends are all part of a K-shaped economy where spending is being driven more and more by those higher-income consumers. Real-time data indicative of layoff activity remained low in November, helping to maintain a rather stable labor market. At the same time, the rate at which employees chose to leave their jobs was decreasing as well.
Bank of America Institute’s proprietary internal data — including aggregate payroll — reveals that growth has accelerated to 0.6% month-over-month in December. That’s a notable increase from November’s rate of only 0.2%. This small uptick indicates that although certain industries are prospering and recovering, job creation is still rather weak across the board.
“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, senior economist at Bank of America Institute
Oren Klachkin, a financial market economist at Nationwide, emphasized the importance of December’s jobs numbers for understanding economic conditions moving forward.
“But I’d say the December jobs numbers in general should give us a lot better sense as to what’s happening in the economy than we had in the November data.” – Oren Klachkin
As firms learn to better operate with these new economic conditions and normalized consumer behaviors, the labor market is again a topic on everyone’s mind. The anticipated jobs report will provide valuable insights into whether recent hiring trends indicate a shift towards recovery or if challenges persist.
Economists are still assessing the longer-term effects that all of these trends will have on overall economic well-being. Broadly, there is increasing agreement that even with some positive progress, the base underlying momentum for job creation may be weaker than expected.
“The true, underlying momentum for job growth is likely much softer and has been much softer for some time now.” – David Michael Tinsley