Cracks Emerge: What Will Friday’s US Jobs Report Reveal About the Weakening Labor Market?

The US labor market is flashing warning signs. All eyes are on Friday's jobs report—will it confirm the slowdown or deliver a surprise?

The Setup: A Market on Edge

Recent data points to a cooling trend. Hiring has downshifted, wage growth is moderating, and the once-red-hot demand for workers shows definite signs of tempering. It’s a shift that has economists leaning forward and traders checking their positions twice.

The Big Question: How Deep Do the Cracks Go?

Friday’s numbers aren't just another data point. They’re a critical health check for the broader economy. A weak report could signal more than just a statistical blip—it might hint at underlying fragility. Conversely, a stronger-than-expected print could throw cold water on growing recession chatter. The stakes? Monumental for monetary policy and market sentiment.

The Ripple Effect: Beyond Payrolls

This isn't just about how many jobs were added. Watch the unemployment rate, average hourly earnings, and labor force participation. These figures will tell the real story about consumer spending power, inflationary pressures, and the Fed's next likely move. Every decimal point will be parsed by algorithms and analysts alike.

The Bottom Line: Data as the Ultimate Arbiter

Markets hate uncertainty, and right now, the jobs picture is the biggest source of it. Friday's report cuts through the noise, offering hard numbers in place of speculation. It will either validate the bearish thesis or force a swift recalibration—because in finance, sometimes the most cynical take is also the most accurate: the market only believes the story the data tells *after* it's already been priced in.

Key Takeaways

• A report Friday from the Bureau of Labor Statistics is expected to show the U.S. economy added a relatively modest 73,000 jobs in December, with the unemployment rate ticking lower after hitting a four-year high in November.
  
• Tariffs, reduced immigration and artificial intelligence have all dragged on job growth since mid last year.
  
• The December data will be the first relatively free of distortions from the government shutdown in the fall.
  

Forecasters believe the U.S. job market expanded slowly in December, extending a streak of underwhelming hiring numbers.

A report Friday from the Bureau of Labor Statistics is expected to show the U.S. economy added 73,000 jobs in December, while the unemployment rate ticked down to 4.5% from 4.6% the month before, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The job growth would be slightly higher than the 64,000 jobs added in November, when the unemployment rate hit its highest level since 2021.

Over the past several months, tariffs have dragged on hiring, and job seekers have had a difficult time finding work, even as President Donald Trump's immigration crackdown reduces the number of workers. The U.S. economy only added 17,000 jobs per month on average between May and November, compared to 147,000 per month in the 12 months leading up to April 2025, when TRUMP announced his "Liberation Day" tariffs on nearly every U.S. trading partner.

Some experts believe the BLS has been overestimating job growth in recent months, and that even those weak hiring figures are too optimistic. Federal Reserve Chair Jerome Powell said the economy has likely been losing 20,000 jobs a month on average since April.

Why This Matters

Labor market concerns have rattled consumers and led the Fed to cut interest rates several times to stimulate hiring and stem unemployment. Friday's report will provide an important snapshot of the health of the economy, and will be closely watched by the Fed and investors.

"After two months of shutdown-related distortions, December should bring a relatively clean jobs report," Sal Guatieri, senior U.S. economist at BMO Capital Markets, wrote in a commentary. " Unfortunately, it will likely confirm the recent sluggish hiring trend."

The labor market weakness has prompted the Federal Reserve to cut its benchmark interest rate at each of its last three policy meetings. Friday's report will be a key data point for the Fed as it considers possible further rate cuts.

Employers have curtailed hiring in recent months due to uncertainty about trade policy, and the effects of tariffs on prices and consumer behavior among other things, according to surveys. On top of that, some businesses say they have reduced hiring or let workers go because of adopting artificial intelligence software to automate certain tasks.

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The December data will be the first relatively free of distortions from the government shutdown in October and November, which disrupted the surveys the BLS uses to create the job growth and unemployment figures, but could still be affected by it.

Forecasters at Goldman Sachs, for instance, noted that the unemployment rate should be lower in December because of federal workers returning to work after the shutdown.

Data from private-sector sources, which are less comprehensive than the massive surveys upon which BLS figures are based, informed forecaster expectations for December. Private employers added 41,000 jobs in December, payroll provider ADP reported Wednesday. That was below the consensus forecast for a pickup of 48,000 jobs, although a rebound from November when private sector payrolls fell by 29,000.