The Labor Market is Frozen: September 2025 Race, Jobs and the Economy Update

No one is hiring. That is the key finding from the Bureau of Labor Statistics’ (BLS) latest jobs report showing only 22,000 jobs were added in August with nearly all industries remaining stagnant or in decline.

The goods-producing industries, including the construction and manufacturing sectors, lost 25,000 jobs. There were steep losses in the professional/business services and wholesale trade industries as well. The only industries that experienced healthy job gains were healthcare, leisure and hospitality. 

Since the administration’s April 11th announcement of its so-called “Liberation Day” and the imposition of an unprecedented tariff policy, the production and logistics industries have lost almost 100,000 jobs. 

It also appears the economy was far weaker going into that system shock than had been previously understood. The economy added 50% fewer jobs than initially reported from March 2024 to March 2025 – with just 911,000 jobs created in those twelve months – according to the BLS’s recently released preliminary results from its annual benchmark, which uses data from the Quarterly Census of Wages and Employment to revise past counts. This would reaffirm consumer surveys during that time showing people were especially negative about the current state of the job market.

According to the latest Job Openings and Labor Turnover release from the BLS, there are now more unemployed people than job openings for the first time since the spring of 2021, with layoffs remaining at historic lows. However, the highly regarded job cuts report from outplacement firm Challenger found that announced layoffs in August were at their highest level since 2008, while planned hiring was the lowest it’s been since 2009. This is the 6th time this year that job cuts have surpassed the previous month’s total.

The low hire/low fire reality is evident in the number of unemployment claims, which has stayed above 1.9 million since May. Even more alarming is that the average number of weeks people are unemployed has risen to 24.5 – a three-year high. 

Despite the unofficial nationwide hiring freeze, the unemployment rate inched up only a tenth of a percentage point to 4.3%, a rate it hasn’t exceeded in three years. Nevertheless, a rising share of workers either want a job, have chosen to leave the workforce altogether (known as discouraged workers) or are working part-time but want full employment (known as underemployed workers). The U-6 rate includes the number of unemployed, discouraged and underemployed workers and it has risen consistently each month of this year, reaching 8.1% last month. 

The unemployment rate for Black Americans has risen throughout 2025, while the jobless rate for most other groups has risen only within the last two months. The former can be taken as an indicator of things to come and as evidence that unemployment might continue to rise for other groups as well. 

Given the slowdown in the labor market, notable observers, including the Chief Economist of Moody’s Analytics and UBS, have increasingly warned that a recession is imminent. The former, who has already stated that the “jobs recession is here,” has put the odds at 48%. Quite extraordinarily, the latter has stated that the probability is 93% based on its assessment of national personal income, spending, production and employment data. 

On September 17, the Federal Reserve revealed its first rate cut of the year. In his speech announcing the cut, Federal Reserve Board chair Jerome Powell noted that the labor market is weak, particularly for college graduates and minorities, echoing growing concerns about rising unemployment rates among both groups. In fact, the Fed appears to be more focused on the labor market than the risk of rising inflation, marking a turnaround from its previous fight against inflation.

The results from BLS’ benchmark revision mean that other economic data, such as income and consumer spending, are weaker and will likely also be revised downward. These revisions will intensify the concerns that the economy is entering a recession. Retail employment in next month’s BLS report, which is normally strong in September due to seasonal holiday hiring, should be closely monitored as it can indicate labor trends for the rest of the coming year.

If this year were a 4×100-meter sprint, the first three legs would have been filled with numerous hurdles, including a trade war and massive reductions in the federal workforce. They have slowed the pace of the economy considerably. As we enter the final 100 meters, the headwinds have strengthened. In the absence of major changes to economic policy, the economy will certainly finish the race, but at an unsettlingly slow pace.

Joseph Dean is the Jr. Racial Economic Research Specialist with NCRC’s Research team.

Photo credit: Joshua Davis via Upsplash.