Adp Reports Huge Layoffs (120,000 Jobs Just Vanished)

Did it just start, everyone? ADP, the private payrolls company, just reported a surprise drop in employment in November 2025. And in fact, this is the biggest drop that we've seen in years, with November private payrolls unexpectedly falling by 32,000. In particular, according to NBC News, small businesses cut 120,000 jobs. And this is now the third month out of four that we've had a contraction in employment month over month, Now, of course, this is something I warned you all about only two to three months ago. I was reporting to you all how the hiring in the U.S. economy had fallen to the lowest level in 15 years. Well, now it seems like the firing is starting to increase, with outplacement firm Challenger Gray & Christmas reporting that layoffs hit the highest level for October 2025 since 03, and that hiring just slowed to the lowest point in 14 years. And what's alarming to me about this data is that the rapid slowing of the U.S. labor market means we might have just crossed a line that there's no coming back from. What we're seeing right now in the labor market looks a lot like what we saw in 2001 before the dot-com bubble recession, in late 2007, early 2008, before the GFC. And in fact, year-over-year job growth, according to the BLS, has decelerated to only 0.8% year-over-year as of September. You can see in a similar part of the cycle as well as early 2001, right before big employment contractions. And actually, historically, any time we've seen job growth slow this much year-over-year, according to the BLS, we have had a recession within the next 12 months. The question is, however, what will be the impact on the housing market and the stock market from a labor market recession? Because we've been operating in this economy the last 15 years, pretty much, with a strong labor market. If you take out the three- or four-month pandemic unemployment spike, we basically haven't had a job market recession in 15 years. So what would happen to home prices and home buyer demand, let's say, if we did actually have this labor market recession next year where the unemployment rate jumps and where more layoffs happen? Well, one really interesting thing about this housing and real estate cycle, everyone, is that we're already in the third or fourth year of a home sale recession. You can see here home sales in the U.S. started contracting in 2022 and 2023 by 17% to 19% year-over-year. Then in 2024 and 2025, sales remained roughly flat, went down even more. So this is four years in a row of a housing market recession. This housing market recession is now being acknowledged by pretty much everyone. Scott Besent, the U.S. Treasury Secretary, just came out and said that the U.S. housing market is in recession last month. Now take a look, though, at the gray line, everyone. The gray line is employment and job growth year-over-year going back to 1960. You can see there's a very historical cycle that takes place where, historically in the U.S., home sales tend to drop in a housing recession two to three years before the job market goes into contraction. You can see this happens fairly consistently that the job market goes into contraction after home sales have declined for three years. This happened in 2008. Sales declined from 2006 to 2008. Then there was a big labor market recession in 2009. This happened in the early 1980s. Home sales declined for three or four years. Then there was a labor market recession in 1982. This is all to say, everyone, the fact that home sales have already been dropping for the last three or four years signals an increased likelihood that the readings we're seeing on the labor market that are weak right now are, in fact, going to lead to a labor market recession that's going to lead to job losses. Now, there's one thing I do want to address, though, about the decline in jobs. It's actually something that the Secretary of Commerce, Howard Lutnick, talked about a couple days ago in response to the ADP jobs report. He claimed that the ADP jobs report going negative was the result of two things. He said it was the result of deportations as well as the government shutdown. You can see here Lutnick, who's Trump's Commerce Secretary, saying bad jobs report caused by shutdown, deportations, not tariffs. Specifically, he's saying that the shutdown caused small businesses to cut back their workers. He's also saying when you deport people, that's going to suppress private payroll jobs numbers of small businesses. And sure enough, everyone, the small business job figures plummeted last month, according to ADP. Businesses that employ one to 19 people cut their payroll 46,000. Businesses that employ 20 to 49 employees cut their payroll 74,000. So we had 120,000 job cuts between small businesses last month in November. Meanwhile, bigger businesses, 50 to 500 plus employees added to their job count. And so there's a bit of a K-shaped labor market downturn happening here, at least in November. According to ADP, it was the small businesses that shed the jobs. It was the larger businesses that added the jobs. But the claim from the Trump administration was that it was deportation specifically that was resulting in that, in the government shutdown. And I just want to address those points because to the extent it is those things, it might mean that we're not in a typical labor market cycle and that maybe when the effects from deportations and the shutdown go away in the future, maybe the job growth will bounce back. So I just want to address those one by one. First, what's the impact of deportations on the labor market? Well, if we look at a data set tracking work permits from eligible immigrants, we can see there's been a huge collapse in work permits from immigrants over the last six months, according to the Brookings Institution. Literally, work permit applications among eligible immigrants have dropped by about 60% in the last six months. So there is some credence to the idea that this labor market downturn we're seeing could be related to either deportations or lower immigration. However, another thing that Letnik said was that it was related to the government shutdown. And that I don't agree with because if we look at the ADP, private payroll numbers, and again, folks, ADP is a payroll processing company, processes payroll for tens of millions of Americans. And so they're reporting what they're seeing on their private payrolls. This isn't government data. This is private payroll data. They're showing that not only the payrolls contract in November, they also contracted in September before the shutdown. They also contracted in August before the shutdown. And they also contracted in June before the shutdown. So four of the last six months, ADP is reporting private payroll contraction. When normally everyone, if we go back the last 15 years, normally in a typical month, ADP is reporting 168,000 jobs gained. 168,000 jobs gained in the typical month. They're now reporting contractions. So that's showing you just how big a loss we're seeing right now in job growth and now going into negative territory. And that's why you have to take this report seriously. This is something that's starting to really happen in real time. And it's reflecting a reality that I know a lot of you have experienced out there in the labor market in the last couple of years. I mean, you guys can let me know in the comment section how you're feeling yourself about the labor market. How is your job going? Are you looking for a job? Did you get laid off? Let us know in the comment section below because I've seen some really strong comments from you guys in the past, giving us updates on what's going on. I wanna hear what you guys are saying because when I talk to my friends or I just talk to people I know, a lot of people are struggling out there to find a job. I mean, this is no joke. I know a bunch of people have been laid off the last couple of years. It's hard to find a job right now. And the reason for that is probably multifaceted. I mean, number one, companies probably overhired during the pandemic. So they're shifting from overhiring to not hiring to now firing. Amazon just announced 30,000 layoffs. Verizon just announced 15,000 layoffs. We're seeing more and more layoff announcements and we're seeing fewer and fewer companies elect to hire, also potentially due to AI. You know, the advent of AI, chat, GBT, LLM, language learning models is making a lot of the entry-level jobs especially somewhat replaceable. I mean, I think about my first job, actually, everyone. My first job out of college was actually the same company I worked for for about seven or eight years. I was a data analyst for a commercial real estate company and I basically helped input numbers into spreadsheets. It was my job and helped underwrite different commercial real estate transactions. That job now might be replaced by AI. They might just give the financial statements to AI and AI populates the model, right? That could be another structural thing why we're seeing lower hiring. However, I want to show you guys one additional data point that's really interesting and actually kind of contradicts everything I just told you. There's another data point out there that's saying, well, yeah, ADP jobs are going down, BLS jobs are going down, but maybe we aren't really seeing mass firings yet. Because folks, US jobless claims fell to a three-year low over Thanksgiving. Check this out. Applications for US unemployment benefits fell last week to the lowest in more than three years, indicating the employers are still largely holding on to workers despite a wave of recent layoff announcements. Initial claims went down to 191,000 for the week, everyone. You could see that this is more than a three-year low in initial unemployment claims. People initially, you know, presumably getting laid off and then applying for unemployment. That's at a very low level right now. That's not at a level indicative of a recession. Now, conversely, the number of continuing claims, people who already are claiming unemployment and continue to claim unemployment is rising up to close to 2 million. So we have an interesting situation in the labor market where if you lost your job, it's hard to find a new one. And that's showing up in the data all over the place. Now, there are layoff announcements, right, from big companies and clearly ADP showing small businesses cutting people too, but those people are not yet applying for unemployment insurance initially. And I think what we're gonna need to see for like the tip off of maybe the 2008 or 2001 style labor market recession, we'll have to see that initial unemployment claim number start to rise. That's gonna be the true signal of it's on. The recession is here. The layoffs are coming. The mortgage defaults are coming. The foreclosures are coming. It's gonna be that initial claims figure, which is one that I'll be reporting to you guys more in my videos in the future here. Now that this labor market downturn has started clearly, when is it gonna really go into high gear? We'll look at those initial claims because you're gonna wanna know this if you're a home buyer, investor, or seller, because the labor market has a big correlation to the housing market, particularly mortgage default. People not paying their mortgage, that goes up when the unemployment rate goes up. And you can see historically, there's almost a one-to-one correlation between the mortgage default rate and the unemployment rate. I mean, look at this, everyone, going back almost 30 years, according to data from the Mortgage Bankers Association, you can see mortgage defaults track the unemployment rate almost exactly. It happened in 2009. It happened during the pandemic. We had a wave of mortgage defaults during the pandemic. And now they're both starting to tick up incrementally, quarter by quarter. Could we see the unemployment rate maybe go up to 5% or 6% next year? If it did, mortgage defaults would probably follow suit, foreclosures would follow suit. And that's another reason why home prices have been stubbornly high. I talk to a lot of people who are more bullish on the housing market. And these people, often investors and realtors, they tell me, Nick, I hear what you're saying, but I don't think there's a downturn because home prices nationally are still at the highest level on record and are still even going up nationally, according to certain data. And that's true. National home prices have not gone down yet. They're roughly flat year over year, according to data from Zillow. So why is that? Well, one reason is we haven't seen the pressure to sell take hold yet. We have not seen initial unemployment claims spike. We have not seen the unemployment rate really spike. And as a result, a lot of sellers who are listing their homes, they don't feel that ingrained pressure to sell. Even amidst record low buyer demand, their home sits on the market for three or four months. A lot of sellers still don't think that they should cut the price. They pull the listing. They think they'll come back to the market next year or they're rented instead. But I do wonder, everyone, if time is starting to run out. We're seeing, especially in a state like Florida, everyone, we're starting to see some crazy, crazy declines here. If I zoom in on St. Petersburg, Florida, everyone, take a look at this. St. Petersburg, it's where I used to live. 2024, 2025, I lived in St. Petersburg. I reported to you guys a year plus ago that this market was gonna correct. What's happening? It's down anywhere from eight to 10 to 15% year over year in St. Pete. We are now seeing sellers take huge losses. This is a house, a townhouse that just sold at a $100,000 loss from what the owner bought it for. The owner bought it in 2023 for 835,000 as a new build. They just sold it for 740,000. The owner took a $95,000 loss on this townhouse in St. Pete. Here's another listing, everyone. This is in Ocala, Florida, to the north of Tampa and St. Petersburg in central Florida, two-bed, two-bath home, 269,000 listed on the market. The owner here bought it for 328,000 in June, 2023, and now it's listed, it's actually pending at 269,000. The owner's taking a $60,000 loss from what they bought it for. These are real losses taking place, real legitimate declines in values on the order of 15% on these houses. And so for those of you who are thinking, oh, there is no housing downturn, folks, there is a housing downturn playing out in many parts of America already. And it's one that is likely to get worse if we see the labor market tilt into a firing recession in 2026. And it's something that the data is now stacking up and saying could be happening when we look at the ADP jobs report, when we look at the BLS jobs report. The question is, where are home values gonna go in your city in zip code? Because this is still a very bifurcated market. 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