In December, the U.S. economy added a tepid 50,000 jobs. That was a bitter-sweet close to a year that was one of the poorest annual rates of job growth in a generation. The jobs increase is great news to hear. Unfortunately, it happens in the context of tumbling job-finding expectations, in the words of a new New York Federal Reserve Survey. This recent survey painted a picture of a nation that is losing hope—people are becoming more pessimistic about jobs and opportunities.
In December, the number of available jobs in the U.S. fell to their lowest level in more than a year. This decline fueled more concern about the labor market. Despite the economic indicators pointing toward stagnation, some Americans, particularly those with high incomes, reported feeling financially strained due to soaring housing and childcare costs. This contrast underscores the pressures that still permeate our economy, as inflationary forces hurt everyday people despite a booming stock market.
Though the job market was struggling, 2025 was a historic year for U.S. stock market performance. And the S&P 500, a commonly referenced gauge of runaway market momentum, somehow continued to find new all-time highs despite the dismal underlying economic picture. Analysts noted that the 125-day moving average of the S&P 500 serves as an essential tool in determining this positive momentum. Despite this very successful return from American stocks, they significantly trailed international markets that massively outperformed the U.S. all year.
The post-pandemic economic landscape has been labeled a K-shaped recovery, as some sectors and demographics have fared much better than others. This pattern is projected to continue through 2026, cementing inequities all the more deeply into our economy. Just as some sectors boom while the rest stagnate or fall behind, creating a two-tracked recovery at best.
Investor sentiment continues to be a key driver behind market performance, illustrated by the Fear & Greed Index. This index measures the fundamental underpinnings of a housing market with seven indicators. It’s a greediness index that scores from 0 to 100, with that 100 score representing the most greedy housing market in the index. The index is full of rich, diverse metrics. It features net new 52-week highs and lows on the New York Stock Exchange, plus 20-day stock versus bond return spreads. A value greater than 1 on this index is very bearish, showing that the mood of investors is starting to turn towards fear.
The economic forecast for early 2026 captures the dominant picture of uncertainty in the job market and the overall economy. The combination of low job-finding expectations and rising living costs suggests that many Americans will continue to feel financially insecure despite stock market gains. The challenge from here will be in closing these gaps and building a more racially equitable economy.