Goldman Sachs makes unemployment prediction | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Updated 9:45 am EST to reflect the official release of the BLS unemployment data for November.

America has a jobs problem. Layoffs are surging, the unemployment rate is climbing, and workers are fighting over fewer jobs. Worse, pay raises are shrinking, even as inflation rears its ugly head.

The situation is squeezing average Americans, causing them to rein in or rethink their spending, contributing to a K-shaped US economy, where the highest-earning households are doing well, partly because of a stock market near all-time highs, while lower- and middle-income households struggle.

Unemployment rate by month (2025):

November: 4.6%
October: N/A (skipped because of shutdown)
September: 4.4%
August: 4.3%
July: 4.2%
June: 4.1%
May: 4.2%
April: 4.2%
March: 4.2%
February: 4.1%
January: 4% Source: Bureau of Labor Statistics.

Goldman Sachs’ latest unemployment outlook suggests that things aren’t getting better, despite the Federal Reserve chasing lower rates and rekindled hiring activity.

The 155-year-old investment bank, considered one of the elite on Wall Street, has experienced numerous economic booms and busts. Its economists predicted the Bureau of Labor Statistics’ employment report on Dec. 17 would show unemployment rose to 4.5%, its highest level since 2021.

Instead, the BLS’s employment situation summary reported that the U.S. jobs market only created 64,000 jobs in November and that the unemployment rate rose to 4.6%.

The U.S. economy chugs along, but labor market cracks widen

The U.S. economy stumbled in the first quarter of 2025, as surging imports ahead of President Donald Trump’s tariff policies and skyrocketing gold trading activity pushed GDP into negative territory for the first time since the first quarter of 2022, when inflation soared in the wake of Covid-era stimulus and supply chain bottlenecks.

The Bureau of Labor Statistics is expected to report that unemployment rose to 4.5% in November, its highest since 2021.

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The 0.6% dip in the first quarter was short-lived. GDP rebounded, gaining 3.8% in Q2. The Atlanta Fed’s GDPNow estimates that the third-quarter GDP was a solid 3.6%. For perspective, the GDP growth rate was 2.8% in 2024.

Yet, the labor market has weakened despite a rebounding GDP. Challenger, Gray & Christmas reports that U.S. employers have laid off over 1.1 million workers year-to-date through November, a 54% increase year-over-year, marking one of the worst showings this century.

Worst years for U.S. layoffs since 2000:

2020:* 2,227,725
2001:* 1,956,876
2002: 1,373,906
2009:* 1,242,936
2025: 1,170,821
2003: 1,143,406 Source: Challenger, Gray & Christmas. *Indicates Recession years

The rising layoffs have pushed the unemployment rate to its highest levels since before Fed rate hikes to quell inflation caused a bear market in 2022.

The BLS didn’t release October employment data due to the shutdown in D.C. Although we will not receive an official unemployment rate for October this week, the BLS will provide insight into the data for October. We got the official unemployment rate for November when the data was released on Tuesday morning, December 16.

The 4.6% unemployment rate followed a discouraging report for September. No unemployment rate was reported for October due to the shutdown. In September, the unemployment rate rose to 4.4% (4.44% to be exact), up from 4% in January and a low of 3.4% in 2023.

Goldman Sachs issues its unemployment forecast

The stakes are high. The economy is highly reliant on consumer spending, and a weakening jobs market is starting to take a toll on consumer confidence.

The Conference Board‘s Consumer Confidence Index fell 6.8 points to 88.7 in November.

More Economic Analysis:

Contributing to the drop is consumers’ lackluster outlook for jobs, which is reinforced by recent Job Openings and Labor Turnover Survey (JOLTS) data. There were 7.7 million open jobs in October, down from a peak of over 12.1 million in early 2022 and over 8 million as recently as November 2024.

Also contributing is a slowing in wage growth. Bank of America reports that wages increased year over year; however, pay raises for low- and middle-income households trailed inflation, squeezing household budgets. Overall, high-income wage growth was 4% in November, but middle- and lower-income household pay growth was only 2.3% and 1.4%, respectively.

That’s not great news, given that the Consumer Price Index, or CPI, inflation was 3% in September, up from 2.3% in April, before most tariffs took effect. We’ll find out the November CPI on December 18.

Goldman Sachs’ unemployment forecast predicted that the BLS would report the unemployment rate rose again in November to 4.5%, lower than the actual 4.6% reported. Ahead of the BLS report it’s economists wrote:

Goldman Sachs economists cited a slate of specific data predictions behind its outlook, including:

Nonfarm payrolls up 10k (70k private) in October and 55k (50k private) in November, Wall Street consensus is 50k in November
The prediction is lower than the three-month average of 62,000.
Moderate private sector job growth offset by a “large drag from the DOGE deferred resignation program.” Goldman Sachs assumes a “70k hit to October payrolls and an additional 10k hit to November” from the DOGE resignation program.
Average hourly earnings up 0.3% month-over-month in October and 0.35% in November.

Instead, the BLS reports 64,000 jobs were created in the month of November.

“Federal government employment declined by 6,000, following a loss of 162,000 in October,” wrote BLS officials.

What it means for the Fed?

If Goldman Sachs’ forecast is correct, then it’s unlikely that the unemployment report from the BLS will change many minds at the Federal Reserve.

After cutting interest rates three times (in September, October, and December), the Fed appears content to let markets digest their recent moves before considering additional rate cuts in 2026.

The Fed’s quarterly dot-plot, which shows Fed officials’ projections for the path of interest rates, indicates only one more rate cut in 2026. Meanwhile, the CME’s FedWatch tool, which is based on market interest rate futures, projects a 22% chance that 2026’s one cut will occur at the Fed’s next meeting in January.