January Job Gains Stronger Than 2025, But Concerns Remain

Labor market recovery still uneven, with questions about sustainability of growth

Published on Feb. 11, 2026

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The U.S. economy added 130,000 jobs in January, a stronger showing than anything seen in 2025. However, the overall labor market picture remains mixed, with revisions showing virtually no gains in the second half of 2025 and concerns about the concentration of hiring in just a few sectors. Economists warn that job growth is likely to be "quite subdued" for the rest of 2026, raising questions about the sustainability of the economic recovery.

Why it matters

The state of the labor market is a key indicator of the broader health of the economy. While the January job gains were better than expected, the underlying data suggests ongoing challenges, including stagnant wage growth and the potential for an "income-less expansion" that could dampen consumer spending and economic growth.

The details

The January jobs report showed a gain of 130,000 nonfarm payrolls and a drop in the unemployment rate to 4.3%. However, revisions to 2025 data showed job gains averaging just 15,000 per month, with a net loss of 1,000 jobs in the last six months of the year. Additionally, nearly all the January job growth came from health care-related sectors, raising concerns about the ability of displaced workers to find new roles. Economists warn that job growth could remain below 50,000 per month for the rest of 2026.

  • The January 2026 jobs report was released on February 11, 2026.
  • In 2025, job growth averaged just 15,000 per month, with a net loss of 1,000 jobs in the last six months of the year.

The players

Gregory Daco

Chief economist at EY-Parthenon.

Christopher Waller

Federal Reserve Governor.

Lorie Logan

President of the Federal Reserve Bank of Dallas.

Beth Hammack

President of the Federal Reserve Bank of Cleveland.

Kevin Warsh

Incoming Federal Reserve Chair.

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What they’re saying

“I would anticipate that for the rest of the year, job growth is going to be quite subdued. Whether it's as subdued as 2025 ... is still an open question. But I would not expect job growth to be higher than 50,000 for the remainder of 2026.”

— Gregory Daco, Chief economist at EY-Parthenon (CNBC)

“We're heading from a jobless expansion to potentially an income-less expansion, because income is essentially the combination of jobs and wages. With both under pressure, that means that for many families, income and income growth prospects are muted.”

— Gregory Daco, Chief economist at EY-Parthenon (CNBC)

“One key warning sign is that in past cycles, GDP growth like this has usually required far more hiring. The fact that hiring has slowed while growth has advanced may potentially be an early signal of a productivity boom that we expect to continue.”

— Rick Rieder, Chief investment officer for fixed income at BlackRock (CNBC)

What’s next

The Federal Reserve will be closely monitoring the labor market and inflation data as it determines its next policy moves, with some policymakers advocating for further rate cuts while others argue the central bank should hold steady.

The takeaway

While the January jobs report showed stronger-than-expected growth, the underlying data suggests the labor market recovery remains uneven, with concerns about the sustainability of the economic expansion. Policymakers face a delicate balancing act as they seek to support employment without fueling inflation.