by Calculated Risk on 1/01/2026 02:36:00 PM
Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2026. 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 2025.
2) Employment: Through November 2025, the economy added 610 thousand jobs in 2025. How many jobs will be added in 2026? Or will the economy lose jobs?
“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).”
That was a little optimistic – excluding the pandemic and the great recession – 2025 saw the fewest jobs added since 2003. Ouch.
| Change in Payroll Jobs per Year (000s) | |||
|---|---|---|---|
| Total, Nonfarm | Private | Public | |
| 1997 | 3,406 | 3,211 | 195 |
| 1998 | 3,046 | 2,733 | 313 |
| 1999 | 3,188 | 2,727 | 461 |
| 2000 | 1,933 | 1,669 | 264 |
| 2001 | -1,733 | -2,284 | 551 |
| 2002 | -518 | -751 | 233 |
| 2003 | 124 | 166 | -42 |
| 2004 | 2,040 | 1,893 | 147 |
| 2005 | 2,529 | 2,343 | 186 |
| 2006 | 2,091 | 1,882 | 209 |
| 2007 | 1,146 | 858 | 288 |
| 2008 | -3,548 | -3,728 | 180 |
| 2009 | -5,039 | -4,965 | -74 |
| 2010 | 1,022 | 1,238 | -216 |
| 2011 | 2,058 | 2,370 | -312 |
| 2012 | 2,186 | 2,253 | -67 |
| 2013 | 2,299 | 2,366 | -67 |
| 2014 | 2,991 | 2,864 | 127 |
| 2015 | 2,7173 | 2,563 | 150 |
| 2016 | 2,331 | 2,124 | 207 |
| 2017 | 2,115 | 2,035 | 80 |
| 2018 | 2,286 | 2,159 | 127 |
| 2019 | 1,986 | 1,771 | 215 |
| 2020 | -9,274 | -8,199 | -1,048 |
| 2021 | 7,233 | 6,837 | 396 |
| 2022 | 4,555 | 4,256 | 299 |
| 2023 | 2,594 | 1,860 | 734 |
| 2024 | 2,012 | 1,559 | 453 |
| 2025 | 6101 | 7661 | -1561 |
| 111 Months through November. | |||
The bad news is the job market has stalled. The BLS noted in December:
“Total nonfarm payroll employment … has shown little net
change since April.”
Fed Chair Powell noted at the recent FOMC press conference that the economy might have lost an average of 20,000 jobs per month over that period.
Click on graph for larger image.
And more bad news – for job growth – is that the labor force will grow slowly in 2026!
This graph shows the jobs added per month since January 2021.
So, my forecast is for gains of around 0.6 to 1.0 million jobs in 2026. This might be an even slower year for job growth than 2025!
Here are the Ten Economic Questions for 2026 and a few predictions:
• Question #3 for 2026: What will the unemployment rate be in December 2026?
• Question #4 for 2026: What will the participation rate be in December 2026?
• Question #5 for 2026: What will the YoY core inflation rate be in December 2026?
• Question #6 for 2026: What will the Fed Funds rate be in December 2026?
• Question #7 for 2026: How much will wages increase in 2026?
• Question #9 for 2026: What will happen with house prices in 2026?
• Question #10 for 2026: Will inventory increase further in 2026?
