2025 was defined by reports of a “low-hire, low-fire” environment: The unemployment rate remained fairly low, at just over 4% in December, yet headlines of constant layoffs seemed to dominate the news cycle, and those who are unemployed are taking longer to find work.
It’s all been very confusing. And the most recent U.S. jobs report, released today, presents more mixed signals.
This week’s report indicated that American employers added 130,000 jobs in January, and the Labor Department reported the unemployment rate fell to 4.3%. Everything in the report isn’t good—it also indicated just 181,000 jobs were created last year, which is the lowest number since 2020—but perhaps it’s not quite as bad as many predicted.
So will “low-hire, low-fire” still be the way we describe a new job market for a new year?
What is a “low-hire, low-fire” economy?
A “low-hire, low-fire” economy is defined by a low number of job hirings coupled with low job firings. Having slashed 108,435 jobs last month, employers aren’t making big moves now in either direction. This kind of economic dynamic results in a lower number of available jobs, which means that those 100,000 people who are out of work may struggle to find something sustainable. That, in turn, could mean that unemployment rates will rise in the coming months.
High-profile job cuts, such as news of hundreds of layoffs at The Washington Post last week, can also stoke fears in the broader labor market, CNBC noted this week. Other companies that have announced layoffs include Amazon, UPS, and Dow.
UPS says it intends to cut 30,000 workers, and last month Amazon announced plans to lay off 16,000 people. These two companies account for nearly 40% of all of January’s layoff announcements.
“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” Andy Challenger, chief revenue officer at global outplacement firm Challenger, Gray & Christmas, said in a statement. “It means most of these plans were set at the end of 2025, signaling that employers are less than optimistic about the outlook for 2026.”
How we got here
American employers announced that more than 100,000 jobs were cut in January—a jump of 118% compared with the same month last year, and the highest for any January since 2009, according to a statement this month from Challenger, Gray & Christmas.
At the same time, employers announced plans to hire only 5,306 workers, the company reported on February 5, which is the lowest number for the month since it began tracking employment trends in 2009. That same day saw a jump in first-time unemployment claims: Per CNN, there were 231,000 initial jobless claims filed at the beginning of February, an increase of 22,000 claims from the week before.
The reasons given for the fresh 2026 job losses include contract loss, market and economic conditions, restructuring, and closures. Last year’s layoffs were attributed to much of the same, though a pivot to artificial intelligence often gets cited as well, regardless of how much of a factor the technology really is.
Data released by the Bureau of Labor Statistics also supports the idea that the job market may get a little tougher, and sooner rather than later. Job openings dropped to 6.5 million at the end of December—the lowest since September 2020. Some of the causes for that drop are political, CNN also reported, and many employers are concerned about import and export tariffs issued by the Trump administration last year. Some companies are focusing their hiring efforts on the world of AI instead and, therefore, the so-called hiring recession may linger.
There is a (potential) bright side: Reports from Challenger compile layoff intentions—so actual job losses may not take place for weeks or even months, if they take place at all.
Inside the latest economic report
Although job growth can be described as sluggish at best, the American economy is still chugging along. This week’s job creation report far exceeded the 75,000 new jobs that many experts predicted, and average wages rose .04% from December 2025 to January 2026.
Some of the uncertainty surrounding job creation is due to the impact of high interest rates, a carryover of uncertainty that surrounds the Trump administration’s shifting trade policies. But per this week’s news, America’s output of goods and services logged its fastest pace in two years, at 4.4%, from July to September 2025, and consumers kept spending money. There’s also speculation from experts that job creation may catch up to economic growth, and the Trump administration’s tax cuts could result in increased consumer spending.
Perhaps the latest jobs news is an indication that the economy, much like other elements of American life, is in a state of flux that a little stability could resolve. “Low-hire, low-fire” may still be at play for a few more months . . . but the economy might just have time to catch up.