The beginning of 2025 appears promising for the U.S. job market, continuing the trend of steady, although less dynamic, employment growth seen in previous years. According to analyst forecasts, the Labor Department is set to announce that during January, around 170,000 jobs were added—a figure reflecting a continued positive trend albeit a slight decline from the previous year's average of 186,000 jobs per month. December was particularly robust, contributing 256,000 new positions.
The unemployment rate remains encouragingly low at 4.1%, suggesting a persistent sense of job security and rising wages for American workers. As noted by Bill Adams, chief economist at Comerica Bank, The economy is kicking off 2025 in good shape. This optimistic start coincides with the early days of Donald Trump's second term as president.
However, uncertainties loom on the horizon. A recent judicial decision has temporarily halted President Trump’s initiative to incentivize federal worker departures, though a federal hiring freeze implemented on January 20 might restrain future employment growth. Moreover, potential geopolitical disruptions, such as Trump's trade policies, add complexity to the economic outlook.
In January, the U.S. imposed a 10% tariff on Chinese imports, with President Trump expressing further intent to target Canada and Mexico, though a last-minute 30-day reprieve was granted. These moves are part of broader tensions concerning trade imbalances and the flow of undocumented immigrants. Trump's willingness to impose tariffs on the European Union over significant trade deficits underscores the administration's aggressive stance on trade.
The economic repercussions of these tariffs are significant. U.S. companies that import goods will likely pass increased costs on to consumers, potentially reigniting inflation which has been slowly retreating since spiking in 2022. If inflation accelerates, the Federal Reserve might reconsider its planned interest rate cuts, potentially stalling economic growth and further job creation.
Looking back over the past few years, job creation has noticeably cooled. From a remarkable 7.2 million new jobs in 2021 as the nation rebounded from COVID-19 lockdowns, the number fell to 4.5 million in 2022, further declining in 2023 and 2024. Correspondingly, job postings have decreased, dropping from 12.2 million openings in March 2022 to 7.6 million in December 2024.
Furthermore, the Labor Department is expected to release revised employment data, which might paint a less optimistic picture of job growth between April 2023 and March 2024. Preliminary revisions indicate that 818,000 fewer jobs were created than initially reported, adjusting average monthly hiring from 242,000 to 174,000 during that period.
Despite these challenges, layoffs remain below pre-pandemic levels, creating a unique landscape where job security persists for those already employed. However, the desire to change jobs has waned as the market contracts, with the number of resignations dropping from a peak of 4.5 million in April 2022 to 3.2 million by December 2024.
As the nation moves forward, the current strong foundation of the job market offers some reassurance. Yet, with policy shifts and global economic pressures, ongoing vigilance will be essential to navigating the uncertain future.
