Additional Coverage:
Job Market Ends Year with a Whimper, Not a Bang
WASHINGTON (AP) – The curtains closed on a year of anemic job growth in December, leaving many job seekers in a state of limbo despite persistently low layoffs and unemployment rates.
The Labor Department announced Friday that employers managed to add a mere 50,000 jobs last month, a figure barely budging from November’s downwardly revised 56,000. While the unemployment rate did tick down to 4.4%-its first dip since June-from November’s 4.5% (also revised lower), the overall picture points to a hesitant hiring landscape.
This data suggests a puzzling trend: businesses are holding back on expanding their workforces even as the economy itself shows signs of picking up steam. Many companies, having aggressively hired post-pandemic, are now seemingly content with their current staffing levels. Others are navigating a turbulent sea of uncertainty, citing President Donald Trump’s ever-shifting tariff policies, stubborn inflation, and the looming specter of artificial intelligence potentially reshaping or even replacing existing roles.
A closer look at December’s gains reveals that nearly all new positions materialized in the healthcare and hospitality sectors (restaurants and hotels). Manufacturing, construction, and retail, however, all reported job losses.
These job figures are under intense scrutiny in both financial and political circles, serving as the first clear snapshot of the labor market in three months. The government’s October report was a casualty of a six-week shutdown, and November’s data was skewed by the shutdown, which extended until November 12.
December’s report ultimately caps a year characterized by sluggish hiring, particularly following “liberation day” in April, when President Donald Trump unleashed widespread tariffs on numerous countries, many of which were later softened or delayed. The initial three months of 2025 saw an average of 111,000 jobs added monthly. Yet, this pace plummeted to a paltry 11,000 over the three months ending in August, before a modest recovery to 22,000 in November.
This subdued hiring highlights a central economic paradox as 2026 begins: economic growth has reached healthy levels, yet job creation has noticeably weakened, and the unemployment rate has actually increased in the last four jobs reports.
Last year, the economy generated a mere 584,000 jobs, a stark contrast to the more than 2 million added in 2024. This marks the smallest annual gain since the COVID-19 pandemic ravaged the job market in 2020.
While most economists anticipate a pickup in hiring this year, fueled by sustained growth and the expected boost from President Donald Trump’s tax cut legislation (leading to significant tax refunds this spring), alternative scenarios remain. Weak job gains could, for instance, stifle future growth. Alternatively, the economy could continue its healthy expansion, with automation and the proliferation of artificial intelligence reducing the demand for new jobs.
Even the already modest 2025 figures are likely to face further downward revisions in February. That’s when the government conducts its annual benchmarking of job figures, aligning them with actual job counts derived from companies’ unemployment insurance filings. A preliminary estimate of this revision suggests it could reduce total jobs as of March 2025 by a staggering 911,000.
Adding to the concerns, Federal Reserve Chair Jerome Powell stated last month that the government might still be overstating job gains by approximately 60,000 per month due to deficiencies in how it accounts for both new businesses and those that have ceased operations. The Labor Department is expected to refine these methodologies in its report next month.
In response to the anemic job growth, the Federal Reserve cut its key short-term interest rate three times late last year, aiming to stimulate borrowing, spending, and hiring. However, Powell has indicated that the central bank might hold rates steady in the coming months as it assesses the evolving economic landscape.
Despite these sluggish job figures, the economy has continued its expansion, achieving an impressive 4.3% annual growth rate in last year’s July-September quarter-its best performance in two years. Robust consumer spending played a significant role in this gain. The Federal Reserve Bank of Atlanta projects that growth, while slowing, could still reach a solid 2.7% in the final three months of last year.
Simultaneously, inflation remains a persistent concern, eroding the purchasing power of Americans’ paychecks. Consumer prices climbed 2.7% in November compared to a year prior, a figure largely unchanged from the beginning of the year and still above the Fed’s 2% target.