New Year, Same Economic Squeeze for Working Families

New Year, Same Economic Squeeze for Working Families

By: Jayme Link and Agatha Pinheiro

2026 begins where 2025 left off: slower hiring, higher prices, and growing anxiety for working families. The latest jobs report offers little reason for optimism under Trump’s economy. The U.S. added just 50,000 jobs in December 2025, while the unemployment rate remained elevated at 4.4%, near its highest level in four years. The number of people unemployed for six months or more is up by roughly 350,000 compared to 2024, signaling rising long-term joblessness. Hiring weakened throughout 2025 as businesses pulled back in the face of rising costs and ongoing economic uncertainty created by Trump’s policies. The hiring rate fell to 3.2% at the end of 2025, one of its weakest levels since the early months of the pandemic in 2020. Looking ahead to 2026, Americans are bracing for more of the same. Barely a third expect employment to increase this year, and even fewer believe the economy will become prosperous, a sharp drop in confidence from a year ago.

That gloom is being driven by persistently high prices under Trump’s policies. As the new year begins, inflation and the cost of living rank as the top concern for Americans, their highest level on record, and that’s reflected in consumer sentiment. The University of Michigan’s Consumer Sentiment Index is down 25% from last January, reflecting widespread anxiety about both high prices on everyday essentials and a sputtering labor market. Despite the White House’s numerous attempts to spin the narrative and duck accountability, working Americans know the truth: Trump’s economic policies are squeezing their budgets and eroding their confidence for the year ahead.

This week in the Trump Slump, new polling and economic indicators continue to show that President Trump’s actions are deeply unpopular, hurting the economy, and harming America’s workers.

Polling and Economic Indicators on Trump’s Handling of the Economy:

• Economic pessimism greets Americans in the New Year. Americans’ predictions for 2026 are considerably more negative than they were for 2025 according to a recent Gallup poll. There were double-digit declines in positive predictions for employment, taxes, economic prosperity and prices.
  • Only 36% of Americans expect employment to increase this year, down from 54% who were expecting it at the start of 2025. Similarly, just 30% expect economic prosperity in 2026, versus 44% for the year before.
  • Additionally, 30% of Americans say inflation/prices is the most important issue for them, the highest since the option was added to the YouGov survey in 2022.
  • The University of Michigan’s Consumer Sentiment Index reached 54 this month, 25% below last January’s reading, as consumers remain worried about high prices and a softening labor market.
• Companies have slammed the brakes on hiring. The December jobs report caps a year of sluggish job growth, with the fewest number of jobs added outside of a recession since 2003. The United States added 50,000 jobs in December 2025, and prior months revised down by a combined 76,000 jobs, while the unemployment rate remains elevated at 4.4% and is near its highest levels of the past four years.
  • As job opportunities shrink, more Americans are staying unemployed for longer periods of time. At the end of the 2025, about one in four unemployed workers had been without work for more than six months — up 16% from the beginning of the year. Underemployment also rose sharply over the past year, climbing from 7.5% to 8.4% — more than double the rate of increase seen in the period before the Great Recession.
  • The latest Job Openings and Labor Turnover data show that job openings fell to about 7.1 million in November from nearly 7.5 million in October, while the hiring rate dropped to 3.2%, one of the lowest levels since April 2020, when the pandemic-induced recession was underway.
• The services sector is feeling the tariffs’ pinch. The headline S&P Global US Services PMI Index registered 52.5 in December, down from 54.1 in November and the slowest growth in the service industry since April.
  • New business grew only slightly — its weakest increase in nearly two years — as uncertainty led clients to tighten their budgets and spending.
  • Tariffs and higher labor costs increased operating expenses to the greatest degree since last May, prompting businesses to increase prices, as inflation accelerates to its highest level since August.
• The manufacturing slowdown shows no signs of easing. The ISM Manufacturing PMI Index dropped to 47.9%in December, the lowest reading of 2025, extending a 10-month contraction that started immediately after Trump took office.
  • New orders for manufactured goods declined 1.3% in October as the economy continues to lose momentum, according to a U.S Census report released this week due to government shutdown delays.
  • Additionally, the U.S. continues to shed manufacturing jobs, ending 2025 with 75,000 fewer manufacturing jobs than at the start of 2025, including 8,000 in December alone. The number of manufacturing sub-sectors adding jobs is also shrinking fast. Of the 72 industries tracked by the BLS, only 38.2% are still adding jobs, down from 47.2% a year ago.

Expert Commentary:

• “Confidence has been dampened principally by uncertainty over government policy and the broader economic outlook, with tariffs and affordability featuring as common threads throughout companies’ more cautious views on their prospects. These affordability worries are underscored by companies reporting an increased impact of tariffs on both input costs and selling prices in December, suggesting we could see the unwelcome combination of slower economic growth and stubbornly high inflation at the start of the new year.” -Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
• “Morale is very low across manufacturing in general. The cost of living is very high, and component costs are increasing with folks citing tariffs and other price increases. It’s cold in our area of the country, absenteeism is worse around the holidays, and sales were lower than we expected for November. So, things look a bit bleak overall.” -ISM® Manufacturing PMI  Report survey respondent in the electrical equipment, appliances & components industry.
• “Order levels have continued to decline: We had a bad October, an awful November and a dismal December. January and February don’t look too good, as bookings are down 25 percent compared to the first two months of 2025.” -ISM® Manufacturing PMI  Report survey respondent in the fabricated metal products industry.
• “2025 revenue was down 17 percent due to tariffs. The lost revenue has inhibited our ability to offer bonuses to employees or create and hire for new positions.” –ISM® Manufacturing PMI  Report survey respondent.