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?

Last year, I wrote about 2025:

"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.

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	3,046	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.  

It appears that population growth will be slow in 2026 (births minus deaths plus net immigration) and the overall participation rate will decline due to demographics.  That suggests that labor force will grow slowly.  My sense is the economy will not lose jobs in 2026, but it is possible.

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 #8 for 2026: How much will Residential investment change in 2026? How about housing starts and new home sales in 2026?

• Question #9 for 2026: What will happen with house prices in 2026?

• Question #10 for 2026: Will inventory increase further in 2026?