The firm forecasts that retail holiday hiring will drop to its lowest level since 2009, when the economy was recovering from the global financial crisis. "Retailers are grappling with multiple challenges this year, including looming tariffs, ongoing inflationary pressures, and a shift toward automation and permanent staff over large seasonal hires," said Andy Challenger, Senior Vice President and workplace expert at Challenger, Gray & Christmas.
This cautious hiring outlook aligns with broader weaknesses in the U.S. job market. In August 2025, employers added just 22,000 jobs, well below economists' expectations. Inflation has also ticked upward, with the Consumer Price Index rising to a 2.9% annual rate in August 2025, up from 2.3% in March.
Monthly Job Growth Trends
The following bar chart illustrates the monthly change in U.S. nonfarm payroll employment from 2022 to August 2025 (seasonally adjusted, source: Bureau of Labor Statistics):
- 2023 Highlights:
- +869,000 (peak month)
- +471,000
- +241,000
- 2024 Highlights:
- +696,000 (peak month)
- +444,000
- +400,000
- 2025 (through August):
- +323,000 (peak month)
- +261,000
- +22,000 (August, lowest)
Inflation Trends
Year-over-year inflation, measured by the Consumer Price Index, has moderated since its 2022 peak of 9%. However, household costs remain elevated:
- December 2022: 6.5%
- August 2025: 2.9%
Tariffs have already increased prices in specific categories. For instance, audio equipment costs rose 12% year-over-year in August 2025, while household goods increased by 10%, according to the Consumer Price Index.
Retail Hiring Outlook
In Q4 2024, retailers hired approximately 543,000 seasonal workers, a 4% decline from 2023. For the final quarter of 2025, Challenger projects retailers will add fewer than 500,000 seasonal jobs, the smallest gain in 16 years. This cautious approach is reflected in fewer seasonal hiring announcements from retailers.
"While a late hiring surge could occur if holiday sales exceed expectations, the current pace of announcements suggests retailers are preparing for a modest season. They’re focusing on efficiency with existing resources," Challenger noted.
Consumer Spending and Tariffs
Tariffs are also impacting consumer behavior. An August 2025 University of Michigan survey revealed that most U.S. adults plan to reduce spending on goods affected by tariff-driven price increases. Only 24% of respondents said they would maintain their usual spending on items with significant price hikes.
"A wave of uncertainty is affecting both retailers and consumers as we approach the year’s end. With hiring slowing and shoppers cutting back, retailers are likely to lean on fewer workers to meet demand," Challenger concluded.