Key Takeaways
\nThe job market is expected to slow significantly in the second half of the year, according to forecasters.
The unemployment rate will rise and the economy will add fewer jobs every month, as tariffs and reduced immigration both take a toll.
Lower immigration could keep the unemployment rate from rising too much, since there will be fewer workers to take the available jobs.<\/p>\n
The labor market is expected to slow down significantly in the second half of the year as President Donald Trump’s trade wars and immigration crackdown disrupt hiring.\u00a0\n<\/p>\n
That’s according to several mid-year forecasts by economists. They see job growth slowing as tariffs and the uncertainty surrounding them drag down business expansions. They also predict the unemployment rate will rise as reduced immigration makes workers harder to come by.<\/p>\n
Jobs Outlook Dims <\/p>\n
Although the job market has stayed resilient so far this year<\/a> amid the administration’s policy upheavals<\/a>, economists predict cracks could start to show in the latter half of 2025. While most forecasters say a recession is unlikely, their outlooks are clouded by unusually high levels of uncertainty<\/a>.<\/p>\n While most economists expect job growth to slow this year, they don’t necessarily agree on the extent.\n<\/p>\n For instance, in a survey conducted by the Federal Reserve Bank of Philadelphia in May, forecasters expected the unemployment rate to tick up to 4.5% by the last quarter of the year. That would break the unemployment rate’s six-month streak of hovering between 4% and 4.2%, a low level by historical standards.\n<\/p>\n Other forecasters predict Trump’s import taxes will have a more severe impact on jobs. Pantheon Macroeconomics, for example, expects the unemployment rate to rise to 4.8% by the end of the year. Pantheon forecasts that the economy will add an average of just 75,000 jobs a month, which would be relatively weak by historical standards. The economy added 139,000 jobs in May, by comparison.\n<\/p>\n How Bad It Will Get <\/p>\n Some economists anticipate a more worrisome development: That the economy will stop adding jobs every month, breaking its four-and-a-half-year-old streak of growth.<\/p>\n “With labor supply running below 100,000 per month, it wouldn\u2019t take much cyclical softening to get an occasional negative print on monthly job growth,” economists at J.P. Morgan, led by Hussein Malik, head of global research, wrote in a commentary. “While we no longer project outright contraction in employment on a quarterly basis, don\u2019t be surprised if we see a minus sign on a monthly reading of payrolls.”<\/p>\n Diane Swonk, chief economist at KPMG, was among those who see risks of a significant downturn that could lead to serious unemployment.\n<\/p>\n “The risk of a recession is still too high\u00a0for comfort,” she wrote in a commentary. “The labor market is starting to look fragile;\u00a0once employment slips into the red, it tends to do so\u00a0rapidly and stay there.”\n<\/p>\n