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10 Labor Markets In 2026, total nonfarm employment will increase by 0.3 percent compared to 0.5 percent in 2025, 1.3 percent in 2024, and 2.2 percent in 2023. Job growth will be narrowly based, with most job gains in health care and education. Transportation, insurance, and a few professional and business services will add a small number of jobs. Jobs will be lost in manufactur- ing, construction, govern ment, mining, financial activities, information, hospitality, restaurants, and retailing. The limited availability of jobs means the quit rate will be extremely low because workers will feel less confident about finding better oppor tunities. In turn, that limits gains in wages because job switchers often see higher than average in- creases in com pensation. The lower quit rate will re duce personal income growth and in flationary pressure, so a wage- price inflationary spiral is unlikely to gain much traction. Industrial production manufac turing jobs will drop. Capacity utiliza tion will fall to 75 percent. Eventually, reshoring produc- tion will be a positive factor for manufacturing job growth, but elevated uncertainty will prevent this in 2026. With labor force and job growth in balance, the unemployment rate will rise only slightly, from 4.2 percent in 2025 to 4.7 percent in 2026. We think that this modest rise is due to less hiring rather than mass layoffs. Moreover, the unemployment rate will be above the economy's full employment unemployment rate of about 4 percent, which reduces pressures on wages and benefits. Again, we expect no traction for wage-push inflation. With unemployment inching upward, the balance of power shifts as employers will find it easy to reload their workforces while workers will struggle to find jobs. Nonetheless, widespread recognition that labor markets will be tight over the next decade due to slower growth of the working-age population will sharply limit layoffs in 2026. Once the slowdown ends, how ever, it will become more difficult to hire workers across many occupations and industries. Work- ers of all types will be in scarce due to demographic trends that are less favorable to labor force expansion than in the past. Low birth rates and less foreign immigra tion suggest that shortages of workers could be a feature of the post-pan demic U.S. econo- my. That bodes well for an eventual rebalancing of income from capital to labor, which should help to reduce income inequalities.