Americans looking for work in 2025 have faced a challenging environment. And 2026 may not be much better.
The November jobs report out Tuesday showed the unemployment rate unexpectedly jumped to 4.6% — relatively low by historical standards but the highest since mid-2021. Meanwhile, recent data from the University of Michigan showed that as of November, the majority of consumers expected unemployment to rise in the year ahead.
Job growth has also been paltry — the job market lost an estimated 41,000 jobs in October and November, Tuesday’s report said — while layoffs have started to creep up. The hiring rate remains at lows seen early in the pandemic and in the aftermath of the Great Recession.
A report last month from the Indeed Hiring Lab noted that in a currently frozen labor picture, “the question won’t be whether the market thaws — it will be whether it cracks.”
Healthcare, for example, represented 47.5% of all job growth during 2025 as of August. A serious pullback in that sector alone, without improvements in others, could further pressure the job market.
“The most probable outcome is not a dramatic break from current conditions, but an extension of today’s ‘low-hire, low-fire’ environment in which both employers and job seekers face a slower, more selective market,” experts with the Indeed Hiring Lab said.
Read more: Worried about job security? Take these 5 steps now to protect your finances.
December data is on deck for Jan. 9, 2026, as the government works through a data backlog resulting from the 43-day government shutdown that ended last month.
The Federal Reserve last week published forecasts estimating that unemployment will peak at 4.5% this year — a level that Tuesday’s report already passed — before falling back to 4.4% by the end of 2026. Last week, Fed Chair Jerome Powell noted that the job market is “under pressure,” while “job creation may actually be negative.”
“It’s a labor market that seems to have significant downside risks,” he said. “People care a lot about that.”
The low-hire, low-fire labor market, which has been difficult for job seekers, looks likely to persist.
“It is concerning to me that we’re starting the year weaker than we were the prior year,” Economic Policy Institute senior economist Elise Gould said. “Do I think a recession is necessarily coming? I don’t know, but I think that I have concerns — and it’s important to remember that even a mild recession can hit historically disadvantaged groups a lot.”
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