Fed Governor Says US Likely Lost Jobs in 2025

A leading Federal Reserve official says that employment in the U.S. likely declined last year.

Data from the Bureau of Labor Statistics (BLS) showing that job creation dropped to an average of 15,000 new positions a month last year contained an “upward bias,” Fed Governor Chris Waller said at a National Association for Business Economics conference Monday (Feb. 23).

Based on a likely further revision of those numbers next year, it seems “clear that payroll employment in the United States probably fell in 2025,” said Waller, whose comments were reported by the Financial Times.

He added that declines in payrolls are outside recessions, and 2025 marked just the third year that it has occurred since 1945.

Writing about the latest jobs report last week, PYMNTS said the findings showed — at least on the surface — a “labor market that’s still adding jobs, but no longer running hot.”

However, for banking, FinTech and payments leaders, the story below the surface has to do with the way work and income is getting more fragmented.

The BLS measures an important pressure gauge: people working part-time for economic reasons, or those who want to be working full-time but can’t get the hours, a group that totaled 4.9 million in January. That’s down from December but still 410,000 higher than a year ago, indicating that some employers might be managing demand by cutting hours instead of jobs.

That is important in the digital economy as “hours volatility” quickly becomes “income volatility, meaning that when “schedules flex, households patch the gap with second jobs, app-based gigs, contract work and, increasingly, faster ways to get paid and manage cash flow between paydays,” PYMNTS wrote.

Research from PYMNTS Intelligence has been monitoring the same underlying dynamic: more Americans are depending on nontraditional income streams, not always by choice.

“Income Instability Is Redefining the Paycheck-to-Paycheck Economy” found that 60% of Americans earned their primary income outside of fixed salaries.

A separate PYMNTS Intelligence report, “The Great Squeeze: Paycheck-to-Paycheck Living Fuels the Side Hustle Economy,” placed a number on how mainstream supplemental work has become, with 40% of American consumers earning added income from side jobs.

“Put those findings next to the BLS’ elevated level of involuntary part-time work, and a consistent picture emerges,” PYMNTS wrote.

“Even when the labor market looks ‘stable,’ many households are still managing uneven paychecks, which has direct implications for bill-pay timing, credit performance, and demand for products like early wage access and instant payouts.”