Economic and labor market uncertainty remains pervasive as the calendar turns to 2026. Tariff policy is still unsettled, immigration has decreased, and labor mobility appears stalled. Compounding these challenges, delayed or missing government data releases have obscured an already murky view of underlying economic conditions.

The forecast for 2026 will not be dramatically different than what was experienced in 2025, according to experts. Indicators point to continuity rather than disruption, with job openings, hiring, and unemployment hovering near current levels. The most likely scenario is a prolonged “low-hire, low-fire” environment marked by caution, uneven demand across industries, and persistent policy uncertainty.

“It is not expected to be a booming labor market, nor is it expected to be a crashing labor market,” said Justin Ladner, senior labor economist at SHRM. “It’s frozen. Slow hiring, slow quitting, a low level of layoffs — very little movement. The big question heading into the new year is whether that tension is going to break in any direction.”

Nicole Bachaud, labor economist at ZipRecruiter, foresees a gradual uptick in hiring in 2026, but otherwise characterized the year ahead as “slow and steady.”

The 2026 labor market won’t snap back overnight and that might be good news, Bachaud said. “Instead of the dramatic surge seen during the post-pandemic hiring boom — which led to subsequent years of headcount reductions — this year we’ll likely see a more gradual pickup in hiring activity,” she said. “The low-hire, low-fire environment that defined much of 2025 will persist into early 2026, but with a crucial difference. While demand will pick up gradually, it will soon run headfirst into a wall of constrained labor supply.”

The labor market still has a way to go before a broader recovery begins, said Noah Yosif, chief economist at the American Staffing Association. “Lower interest rates and immigration-induced labor shortages will provide employers with the capital and opportunities to add headcount, but these changes will take time to filter through the economy,” he said. “Layoffs are consistent with the current unemployment rate, and employers remain hesitant to hire as a result of elevated labor costs owing to inflation; changing workforce needs induced by artificial intelligence; and uncertain economic conditions driven in part, by current trade policy.”

Hiring on Two Tracks

Experts point out that the labor market is increasingly bifurcated. “Health care is adding jobs, while leisure and hospitality, retail, manufacturing, and transportation are shedding them,” said Lisa K. Simon, chief economist at Revelio Labs.

She added that job postings overall continue to fall. “Postings have been down for 12 consecutive months, driven by employer uncertainty, tariff pressures, and general cautiousness rather than supply-side constraints,” she said.

Ladner agreed that the labor market as a whole doesn’t characterize every industry. “Health care has stood out as a sector with an intense amount of demand, while other parts of the labor market have clearly cooled off, especially entry-level roles in white collar occupational groups,” he said.

Read the full article here.