Question #2 for 2025: How much will job growth slow in 2025? Or will the economy lose jobs?

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2025. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I posted thoughts on those in the newsletter (others like GDP and employment will be on this blog).

I’m adding some thoughts and predictions for each question.

Here is a review of the Ten Economic Questions for 2024.

2) Employment: Through November 2024, the economy added 2.0 million jobs in 2024. This is down from 3.0 million jobs added in 2023, 4.8 million in 2022, and 7.3 million in 2021 (2021 and 2022 were the two best years ever), but still a solid year for employment gains. How much will job growth slow in 2025? Or will the economy lose jobs?

For review, here is a table of the annual change in total nonfarm, private and public sector payrolls jobs since 1997.

Change in Payroll Jobs per Year (000s)
	Total, Nonfarm	Private	Public
1997	3,406	3,211	195
1998	3,047	2,734	313
1999	3,183	2,722	461
2000	1,937	1,673	264
2001	-1,734	-2,285	551
2002	-515	-748	233
2003	125	167	-42
2004	2,039	1,892	147
2005	2,527	2,341	186
2006	2,091	1,882	209
2007	1,145	857	288
2008	-3,548	-3,728	180
2009	-5,041	-4,967	-74
2010	1,029	1,245	-216
2011	2,066	2,378	-312
2012	2,172	2,239	-67
2013	2,293	2,360	-67
2014	2,999	2,872	127
2015	2,717	2,567	150
2016	2,327	2,120	207
2017	2,111	2,031	80
2018	2,283	2,156	127
2019	1,988	1,773	215
2020	-9,274	-8,224	-1,050
2021	7,245	6,853	392
2022	4,528	4,229	299
2023	3,013	2,304	709
2024	2,274¹	1,784¹	490¹
¹12 Month Change Ending in November.

The good news is job market still has momentum heading into 2025.

Click on graph for larger image.

The bad news – for job growth – is that the labor force will grow slowly in 2025!

This graph shows the jobs added per month since January 2021.

There was strong job growth in 2021 and 2022 as the economy bounced back from the pandemic recession.

Job growth slowed in 2023 but was still historically strong. Job growth slowed further in 2024 but was still solid.

It appears that population growth will slow to around 1.2 million in 2025 (births minus deaths plus net immigration) and the overall participation rate will decline due to demographics. That suggests that labor force will grow slowly or might even contract. That is why I think the unemployment rate will decline.

So, my forecast is for gains of around 1.0 million jobs in 2025. This will probably be the slowest job growth since 2010 (excluding the 2020 pandemic job losses).

Here are the Ten Economic Questions for 2025 and a few predictions:

• Question #2 for 2025: How much will job growth slow in 2025? Or will the economy lose jobs?

• Question #3 for 2025: What will the unemployment rate be in December 2025?

• Question #4 for 2025: What will the participation rate be in December 2025?

• Question #5 for 2025: What will the YoY core inflation rate be in December 2025?

• Question #6 for 2025: What will the Fed Funds rate be in December 2025?

• Question #7 for 2025: How much will wages increase in 2025?

• Question #8 for 2025: How much will Residential investment change in 2025? How about housing starts and new home sales in 2025?

• Question #9 for 2025: What will happen with house prices in 2025?

• Question #10 for 2025: Will inventory increase further in 2025?