By any outward measure, the US labor market still looks intact. Unemployment remains below 5%. Layoffs are not surging. Payrolls are, technically, still growing. And yet, beneath the surface, confidence has collapsed, and with it, a core assumption of the American economy: that if you lose a job, you can find another. That faith is now at its weakest point in more than a decade.
In December, the probability that Americans believe they could find a new job fell to a record low of 43.1%, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations. The survey, which has been reporting on household sentiment since 2013, revealed that the worry about losing one’s job had grown to the highest average level since the first quarter of 2025, even as the notion of voluntarily quitting a job dropped to the lowest point since the middle of 2023.Shadowed by the bleak story is a narrative of workers feeling trapped, less hopeful about their prospects, less willing to move, and more and more worried about the future.
A market that has stopped moving
Economists describe the current labour environment as one that has shifted into a “low-hire, low-fire” equilibrium. Companies are not aggressively shedding workers, but they are also not hiring in meaningful numbers. The result is a labor market that appears stable while quietly stagnating.
That slowdown has been building for months. US hiring activity has dropped to levels last seen during past recessions, excluding the pandemic shock of 2020. Business investment has stalled amid extreme uncertainty, driven by sweeping trade policy shifts, volatile immigration flows, and broader geopolitical tensions, leaving employers reluctant to commit to expanding payrolls.The pressure is already visible. Long-term unemployment has edged higher. Wage growth has cooled. For lower- and middle-income households, the slowdown has translated into thinner pay raises, fewer opportunities to switch jobs, and a widening gap between those insulated from the downturn and those exposed to it.
A jobs report that may mislead
All eyes now turn to the December jobs report, set for release by the Bureau of Labor Statistics on Friday. Consensus estimates compiled by FactSet suggest payrolls grew by 55,000 last month, roughly in line with the subdued pace seen throughout 2025 and slightly below November’s preliminary gain of 64,000 jobs.Some economists believe seasonal holiday hiring could push that figure higher, possibly above 100,000. The unemployment rate is expected to tick down to 4.5% after hitting a four-year high of 4.6% in November.But appearances, economists warn, may be deceptive. Even a strong December print would not change the larger picture. Excluding the pandemic-distorted year of 2020, employment growth in 2025 was the weakest the US has seen in decades. The labor market is not collapsing, it is calcifying.
Growth concentrated in two sectors
The unevenness of the slowdown is perhaps its most troubling feature. Health care and leisure and hospitality, together accounting for about 22% of total US employment, have carried the labor market almost entirely. From January through November 2025, those two sectors were responsible for 84% of all net job gains. For the remaining 78% of the workforce, job creation has been scarce or nonexistent.Health care hiring has been propelled by structural forces, most notably an aging population that continues to drive demand regardless of economic conditions. Leisure and hospitality, meanwhile, has benefited from consumer spending patterns in an increasingly bifurcated economy, one where higher-income households continue to spend freely even as others pull back.Manufacturing, construction, professional services, retail, and technology have all struggled to add jobs at scale. In some cases, employment has outright declined.
April changed everything
The labor market’s imbalance deepened after April 2025, when President Donald Trump announced the most expansive round of tariffs of his second term. Business sentiment deteriorated sharply in the weeks that followed. Hiring plans were shelved. Capital spending slowed.From April through November, job growth in health care and leisure and hospitality alone exceeded the net number of jobs added across the entire economy during that period, a striking indicator of how broadly hiring had frozen elsewhere.
Confirmation in the data
Fresh evidence of the slowdown arrived this week with the release of the job openings and Labor Turnover Survey. In November, US job openings declined again, and the hiring rate fell to its lowest level in more than a decade, excluding the pandemic.At the same time, layoffs remained subdued, and so did quits. Workers, sensing limited alternatives, are staying put. Employers, uncertain about demand, are doing the same. It is a labor market locked in place.
The cost of stagnation
The danger of this moment is not an immediate surge in unemployment but something slower and more corrosive: Lost mobility, stalled wages, and deepening inequality. When workers no longer believe they can move up or move on, economic dynamism erodes.The New York Fed survey’s record-low reading on job-finding expectations is more than a data point. It is a signal of eroding confidence and of an economy where opportunity feels increasingly constrained. For now, the labor market is holding together. But hope, it seems, is already slipping away.