Jobs Report_ US Labor Market Frozen in 2026 (What This Means Next)

The jobs report was released today and the U.S. labor market is frozen. So I'm going to be honest with you, I mean everybody knows that the labor market is weak, but then again it's not collapsing and of course it's not booming. But we're in a situation right now, at least for December, that was reported on that the hirings and the layoffs are slowing down, both of them. The Federal Reserve has been lowering interest rates to support the labor markets, and let's see how that's been going. And also how this jobs report affects the Federal Reserve's upcoming decision about interest rates, like what they're going to do, lower it or not, later this month. So here's the gist of it. In the month of December, the U.S. labor market added 50,000 jobs, which actually came in below expectations. Analysts were expecting it to be 73,000 jobs added in December. The unemployment rate fell to 4.4%, so the report wasn't great, you know, it wasn't terrible. Now I want to show you what happened. I want to show you this chart showing the monthly jobs added or lost for the past few years. And as you can clearly see, it's a downward trend. The U.S. labor market has been weakening, which is why the Federal Reserve has been cutting interest rates. And just take a look at where we are today. 50,000 jobs added, right? But I do want to point this out, because I told you this last time that this would happen, and I know that many people agreed and they knew that this was coming. The government previously reported that we lost 105,000 jobs in October, okay? Now they revised it downward to job losses of 173,000 for October. And that's not a small amount. Like, how are they off by about 70%? Like, it's ridiculous. And they also revised November's figures downwards by 8,000 job losses as well. So we added 50,000 jobs in December. I mean, that's at least what they're reporting to us. But I'll just say I'm not so sure about that, and we'll see what the revision says in the upcoming months. And here's the rate of unemployments. The report shows that the unemployment rates dropped from 4.6% to 4.4%. So that's actually great improvements. However, I just want to say that we all know that these numbers are manipulated. They're not painting an accurate picture of reality. But I just want to say that it's still important, it's very important to know the narrative that the government is presenting to us, because that's going to allow us to predict what they're going to do next based on their storytelling. So essentially, they're saying that the labor market is doing great. It's improving, you know, jobs added and unemployment's going down. Here's something interesting. The government is reporting that wages are growing at a rate of 3.8%. So that shot up from 3.5% from the prior month. And you know what, that's great. Like, I'm happy to see that go up. It's great to see that people are making more money. But I just want to say that the wage growth of 3.8%, that's still below the inflation rates of an estimated 6%. And with that being said, how do I interpret the situation? It means that Americans continue to lose purchasing power. It means that the poor are getting poorer and the middle class continues to shrink. So that's my interpretation. Now, I want to show you how today's report affects the Federal Reserve's upcoming decision. The next Federal Reserve meeting is going to take place on January 28th. And at that meeting, they're going to decide whether to cut interest rates or not. Before today's results from the jobs report, there was a 13.8% chance that the Federal Reserve would cut interest rates at that January 28th meeting. And an 86.2% chance that they're not going to cut rates. This is according to the CME FedWatch tool. After the results, the odds of an interest rate cut at that meeting fell from 13.8% to now 5%. Okay, why? It's because the jobs report was not terrible. If the jobs report came out horribly, then it would encourage the Federal Reserve to cut interest rates in order to further support the labor markets. But again, the report was not horrible. Therefore, they don't see the need to cut interest rates in January. So it's as simple as that. And just for fun, I want to show you the subsequent Federal Reserve meeting, the expectations. After the January meeting, the Federal Reserve is going to meet again on March 18th. Before today's report, there was a 59.1% chance that the Federal Reserve will keep interest rates unchanged by then and at that meeting. After the results of today's jobs report, the odds that the Federal Reserve will keep interest rates the same in March went up from 59.1% to 68.9%. So it's going to be the same story. If the labor market is not struggling, then there's going to be less of a need to cut interest rates to help the labor markets. Now, let's go back to the labor markets. I want to show you this. This is the Challenger report. For the full year of 2025, employers announced approximately 1.2 million job cuts. That's a 58% increase compared to 2024. Here's where the biggest job losses came from. Warehousing saw 95,317 job cuts in 2025. The reasons cited were a changing supply chain, shifting consumer behavior, and automation. Technology saw 154,445 job cuts in 2025. This is due to artificial intelligence and overhiring in previous years. The governments saw 308,167 job cuts in 2025. So this one is up 703% compared to 2024. The number of federal workers decreased by 9% compared to the previous year. Now, here's a piece of good news for you. In December, employers announced plans to hire approximately 10,500 people. That's up by 16% compared to November. And that's up by 31% compared to December of 2024. Now, in terms of how the stock market reacted to the jobs reports, the market reacted positively and markets are up. We didn't get a... I mean, this is what happened. We didn't get a really strong reaction. For example, the S&P 500 today is up less than 1%. However, the S&P 500 was already floating around record high levels and it made a new one. So what's really driving this market up is liquidity. The Federal Reserve is currently printing $40 billion a month. So while the jobs report did give the markets a little bit of a boost today, that's not the driving force behind the upward trajectory. And what did I tell you before? That the markets are just rigged to go up, at least in the long term. It's simply financial asset inflation. So that's why I said previously that you should just stay invested because as a person with a long-term mindset, we all know how this game works. Now, in terms of where the labor market is going, back in December, the Federal Reserve gave their projection. They expect that the rate of unemployment will end this year, 2026, with an unemployment rate of 4.4%. And we're currently at 4.4%. Therefore, the expectation is that this situation that we're in right now, it's not going to get better. It's not going to get worse by year end. This is the environment that we're basically going to be stuck in for the rest of the year. So that's their expectation. But obviously, they don't always get it right. But again, it's good to know what people are expecting. So the Federal Reserve said that the most important data points to them for the labor markets is the rate of unemployment. If this rises, like the unemployment rate rises, then they're going to be more inclined to cut interest rates. If the unemployment rate falls, then they're most likely going to delay further rate cuts. And I want you to know this. This is very important. The Federal Reserve projected that they're only going to cut interest rates one time this year by 0.25%. We're currently at a Fed Fund's interest rate of 3.5% to 3.75%. It's a range. One cut would bring us down to 3.25% to 3.5%, which is why it's listed as 3.4%. However, you have to remember that this is what Jerome Powell, as chair of the Federal Reserve, the new Fed chair that Trump's going to nominate very soon, like it could be any day now, that new Fed chair is going to be much more aggressive with the interest rate cuts. At least that's the expectation. And you cannot say that, well, the Federal Reserve's decisions are determined by 12 voting members. So a new Fed chair is not going to be a game changer. You can't say that because that logic is incorrect. That's because the Fed chair has enormous influence on the other voting members. And typically the voting members usually are unanimous in their decisions. Not so much in their recent decisions, but that's how it generally works. In conclusion, the labor market continues to weaken, but today's report was not horrible. So based on the results, I expect that the Federal Reserve's not going to cut interest rates at their upcoming meeting in January, January 28th. So that's for the labor market. Please subscribe. Thank you for the support. And I wish you a very nice day. Take care.