Expect These Three Job Market Reversals In 2025

If you thought the great job market of the past four years would last forever – or even for this coming year, for that matter – please do some more thinking. Don’t be surprised if it does a complete reversal or, at best, slows down.

All the signs are there.

The dust has settled on the 2024 election and the intentions of the party in power are clear. As an independent career coach who has been at it for 27 years and has coached clients through seven presidential elections (and lived as an adult through another eight), I recognize the signs and am prepared to do a little prognosticating. I’m not going to get tripped up by specifics; those are too easy to screw up. So let me tell you about the three general broad strokes I see on the near horizon.

1. The unemployment rate will rise.

There are two reasons that this is a sure bet. One, it’s historically low – at or around 4.0% – and has been for quite some time: 36 months – a record. The normal expansion and contraction of the market can take care of this by itself, but there are other forces at work. In particular, the president-elect has already pledged to undo everything the outgoing president did, much of which had a direct influence on the growth of the economy and workforce. We can debate this if you wish, but my bet is set.

2. Job creation will hit a sustained slump.

Although Q1 could still show the momentum of the wildly successful past for years, an economy that de-emphasizes support for the middle class will take the wind out of the job creation sails. For example, when the American Rescue Plan Act went into effect early in 2021, pumping $1.9 trillion mostly into middle class hands, that money was promptly spent on goods and services, and that led to higher demands for them, leading to retention and addition of jobs to produce and deliver them. Further, dramatic action taken by the previous administration that was credited with fueling the job creation engine, seems to be headed for abandonment. This all points to a dim picture on the job creation front.

3. Crackdown on immigrants will not create jobs and will put upward pressure on inflation.

Immigrants are – and always have been – good for the economy in countries all over the world and throughout the years. With dreams of working their way up, they are more than happy to fill many jobs that host country citizens won’t do. And they do them mainly for lower wages. This keeps low the cost of farmed produce, animal products, and services like landscaping and building maintenance. They are grateful for these jobs and diligently put their wages to educating their children. Take them out of the equation and wages will go down for workers re-entering the workforce and will rise (slightly but insufficiently) for a small segment of workers taking the jobs vacated by deportees. This, in turn, will force product pricing up, re-igniting inflation. Jobs will not be created but refilled and products and services will become more costly. That’s the makings of an inflation, which, of late, is lower in the U.S. that in any other industrialized country, having fallen from 9.1% to 2.5%.