Hiring decelerated more than anticipated in December, marking a lackluster conclusion to what has been one of the weakest years for job growth in decades, a situation that exacerbates America’s affordability crisis. The US economy experienced an addition of approximately 50,000 jobs last month, a deceleration from the downwardly adjusted figure of 56,000 jobs added in November, as reported. The unemployment rate has decreased to 4.4%, down from a revised 4.5% in November. Analysts anticipated a net increase of 55,000 jobs in December, alongside an unemployment rate of 4.5%, as per the consensus estimates. With December’s estimated job gains, which are subject to revision, the US economy added a total of 584,000 jobs over the course of the previous year. Excluding recession years, this marks the most subdued annual job growth observed since 2003, according to data. The modest increases were predominantly fueled by a select few sectors.
“The United States is in a jobless boom,” stated Heather Long during an interview. “In 2025, hiring activity was virtually nonexistent … discussions would center around job losses in 2025, were it not for the health care and social assistance sectors.” Alongside the modest increases noted for December, the payroll estimates for October and November were adjusted downward by a total of 76,000 jobs. Nonetheless, the modest rate of employment growth is, in fact, even less robust than indicated by the December report – a reality that will be more evident in the January jobs report. The BLS is set to publish the outcomes of its annual benchmarking process, which reconciles the more immediate survey-based monthly estimates with the delayed yet more precise payroll data derived from employers’ quarterly tax filings. The initial assessment, published in August, indicated that approximately 911,000 fewer jobs were expected to be added for the year concluding in March 2025. “With these revisions, the story of payroll employment in 2025 will convert, ex post facto, from ‘snail-like growth’ to ‘recessionary-like conditions,’” Brian Bethune wrote in commentary on Friday.
The current labor market characterized by low hiring and low firing has led to an increase in the number of individuals who find themselves on the periphery of employment opportunities. In December, the proportion of individuals who had been unemployed for 27 weeks or longer increased to 26%. That indicates “unemployment is increasingly becoming a permanent state rather than a temporary transition,” noted Nicole Bachaud. Nonetheless, Friday’s report revealed a few positive aspects, notably stronger-than-anticipated wage increases. Average hourly earnings increased by 0.3% for the month, with a year-over-year rise of 3.8% – a slight improvement relative to inflation. The labor market was exhibiting signs of deceleration as it approached 2025, continuing its trend of normalization in the aftermath of the significant economic disruptions caused by the Covid-19 pandemic. However, the gradual cooling transitioned abruptly into a freeze by the spring. Long noted that approximately 85% of the year’s job gains were realized within the initial four months.
In April, President Donald Trump declared his “Liberation Day,” introducing a comprehensive set of extensive and elevated tariffs on a wide array of imported goods. The combination of these significant policy changes has led to a marked increase in uncertainty, subsequently dampening sentiment considerably. According to Long in an interview, tariffs and the associated uncertainty were among the three significant factors that led to the “hiring recession” affecting nearly all industries last year. Alongside tariffs, employment levels have been reduced in sectors that expanded their workforce excessively during the pandemic. Furthermore, the ascent of artificial intelligence contributed significantly, she noted. “What transpired with AI is that companies required capital to invest in AI, leading them to reduce hiring to allocate that capital,” she stated. “It wasn’t so much a matter of, ‘I’m going to use the robot to replace the human.’ It was, ‘I need the dollars to go to tech investment instead of human investment.’ The outcome was subdued employment growth, or in some cases, outright declines, across the majority of sectors. The sole exceptions were health care – an industry expanding due to an aging demographic – and leisure and hospitality, which has benefited from a progressively divided economy, where affluent Americans continue to accumulate wealth while a growing proportion of middle- and lower-income households face heightened pressures. That was once more the situation in December. According to data, leisure and hospitality sectors experienced a net increase of 47,000 jobs, whereas health care and social assistance contributed an additional 38,500 jobs. Employment declined in the goods-producing sector, especially within manufacturing, alongside retail trade, where seasonal hiring did not reach the levels observed in previous years.