Rising Unemployment Rate Signals Economic Concerns

The U.S. unemployment rate has risen to 4.6% as of November 2025, marking its highest level since September 2021. This increase follows a significant job loss of 105,000 in October, with only 64,000 jobs added in November, according to the delayed jobs report released by the Trump administration. The Bureau of Labor Statistics (BLS) noted that the October decline was largely attributed to government employees who accepted a deferred resignation offer earlier in the year.

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Economist Justin Wolfers from the University of Michigan has highlighted the rising unemployment rate as a concerning signal for the labor market and the broader U.S. economy. He referenced the "Sahm Rule," which indicates early stages of recession when the three-month moving average of the unemployment rate rises by 0.5% relative to the previous year's minimum. Wolfers pointed out that the average climbed to 4.5% for the September to November period, up from 4.0% in January, suggesting a troubling trend.

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Despite some economists expressing optimism earlier in the fall due to better-than-expected GDP growth, Wolfers cautioned that the labor market is showing signs of weakness. He noted, "All told, the headline numbers suggest virtually no employment growth since April." Claudia Sahm, the economist who developed the Sahm Rule, acknowledged the rising unemployment as a concern but emphasized that it is not yet at levels typically seen in the early stages of a recession.

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Market analysts have echoed Wolfers' sentiments, with Bankrate senior economic analyst Mark Hamrick stating, "The not-so-good news is that it isn’t pretty." The revisions to previous job gains, totaling a downward adjustment of 33,000, further complicate the outlook. Heather Long, chief economist at Navy Federal, warned that the U.S. economy is experiencing a "hiring recession," noting that job gains have been nearly nonexistent since April, except for the healthcare sector.

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Kevin Hassett, director of the National Economic Council, defended the employment figures, attributing the job losses primarily to federal government workers who participated in the buyout program. He described the private sector's trajectory as solid, suggesting that the overall employment landscape remains stable.

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While some experts express concern over the labor market's trajectory, others remain cautious about interpreting the data. The absence of an October unemployment rate due to data collection issues has led to calls for caution in applying standard economic indicators. The next major economic indicator, an inflation reading for November, is expected to be released soon, which may provide further insight into the economic landscape.

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• “The headline numbers suggest VIRTUALLY NO EMPLOYMENT GROWTH since April.” — Justin Wolfers, Professor of Economics, University of Michigan

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• “The simplicity of today is that the unemployment rate continues to move higher.” — Kevin Gordon, Schwab Center for Financial Research

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• “The US economy is in a hiring recession.” — Heather Long, Chief Economist, Navy Federal

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• “I would be cautious with standard 'rules of thumb' for the next few months,” — Claudia Sahm, Former Federal Reserve Economist

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