Creative Investment Research has revised its February 2025 unemployment forecast ahead of the March 7, 2025, Bureau of Labor Statistics (BLS) report, incorporating worsening economic conditions reflected in the latest Atlanta Federal Reserve GDPNow projections. The U.S. economy is now expected to shrink by 2.8% in Q1 2025, a sharp downward revision from -1.5% just days earlier, signaling deeper-than-expected economic contraction and potentially accelerating job losses across key industries.
The latest data show that personal consumption expenditures growth has fallen to 0.0%, indicating a near standstill in consumer spending, while private fixed investment growth has dropped to 0.1%, reflecting a sharp pullback in business investment. These factors are expected to have a direct impact on the labor market, leading to a more pronounced rise in unemployment than initially forecast.
Revised Unemployment Forecast for February 2025
1. Overall Unemployment Rate Likely to Rise to 4.2%
An increase from January’s 4.0%, reflecting slowing hiring, growing layoffs, and weakened economic activity.
2. Black Unemployment Expected to Climb to 6.8% (Revised from 6.5%)
A 0.6 percentage point increase from January (6.2%), reflecting government job reductions and weaker hiring in sectors that disproportionately employ Black workers.
As government employment declines further, Black workers—who are overrepresented in the public sector—are more vulnerable to job losses.
3. Hispanic Unemployment Projected to Increase to 5.8% (Revised from 5.5%)
The sharp downturn in consumer spending (0.0% growth) is likely to disrupt service-sector employment, where Hispanic workers hold a large share of jobs in retail, hospitality, and food services.
Construction slowdowns due to near-zero private investment growth could further impact Hispanic employment.
4. White Unemployment Expected to increase to 4.0% from 3.9%
White unemployment is less affected by the downturn due to greater employment mobility, stronger job networks, and lower exposure to declining industries.
5. Asian Unemployment Expected to Edge Up to 3.9% (Revised from 3.8%)
High-skill industries, particularly in finance and tech, are showing signs of job losses, contributing to a slight rise in Asian unemployment.
Worsening Economic Indicators Confirm a Weaker Labor Market
• Atlanta Fed GDPNow: -2.8% Expected GDP Contraction in Q1 2025 (Down from -1.5% on Feb. 28)
• Personal Consumption Expenditures Growth at 0.0% (Signaling a complete halt in consumer spending expansion)
• Private Fixed Investment Growth at 0.1% (A steep decline from the previous estimate of 3.5%, reflecting businesses pulling back on expansion and hiring)
• Weekly Jobless Claims Surged to 242,000 (The highest level in five months, confirming rising layoffs across multiple sectors)
Policy Implications and Next Steps
"These revised numbers show that the economic slowdown is accelerating faster than expected," said William Michael Cunningham, economist and editor of Impact Investing Online. "The steep contraction in GDP, coupled with near-zero consumer spending and investment growth, is a warning sign that employment conditions may worsen in the coming months. Black and Hispanic workers, who have historically been most vulnerable to downturns, are already experiencing higher job losses, and without policy intervention, these disparities could widen."
Creative Investment Research will continue to monitor labor market trends and provide data-driven analysis on economic conditions affecting historically marginalized communities.