In recent months, the United States labor market has demonstrated a marked weakening that contrasts sharply with its performance over the preceding years. Whereas the economy routinely added over 100,000 jobs each month in a steady climb, the period from May 2025 through December 2025 has seen a dramatic slowdown. Specifically, total non-farm payroll growth during this eight-month span has amounted to only 93,000 jobs, representing an average monthly increase near 11,625 positions. This deceleration is punctuated by the occurrence of negative monthly changes in employment in three out of the last seven months.
| Month | Non-Farm Payroll Monthly Change |
|---|---|
| June 2025 | -13,000 |
| July 2025 | +72,000 |
| August 2025 | -26,000 |
| September 2025 | +108,000 |
| October 2025 | -173,000 |
| November 2025 | +56,000 |
| December 2025 | +50,000 |
Such a signal—a scenario characterized by at least three monthly declines in non-farm payroll numbers within a seven-month timeframe—is a rare occurrence in the modern economic record. An examination of four decades' worth of data reveals that this pattern has materialized in only three prior intervals: from September 1990 to November 1991, April 2001 to December 2003, and January 2008 to December 2010. The current emergence of this pattern constitutes its fourth incidence.
The significance of this signal lies in its historical correlation with major U.S. recessions. Each instance in which this employment pattern was observed coincided directly with notable downturns in economic activity. During the early 1990s recession, the S&P 500 stock index declined by approximately 20%, marking a relatively moderate market contraction. The technology bubble burst led to a much steeper drop, with the index nearing a 50% decline and the Nasdaq-100 experiencing even sharper losses. The period surrounding the financial crisis of 2008 was marked by a dramatic market slide of over 50% in the S&P 500.
Presently, despite the stock market hovering near historic highs and U.S. gross domestic product expanding at an annualized rate near 4%, with the unemployment rate maintaining a level under 5%, the labor market signal casts a shadow of caution. This phenomenon suggests the potential for more significant economic challenges notwithstanding the surface indicators of strength.
In summary, the labor market developments over the past several months signal a rare and consequential pattern that aligns closely with conditions that have historically preceded U.S. recessions. This alignment warrants close attention given the possible implications for economic stability in the near term.