Job growth slows to a decade-low pace in the US
Hiring slowed more than anticipated in December, marking a sluggish conclusion to what has been one of the weakest years of job growth in decades, a situation that further intensified America’s affordability crisis. Last month, the US economy experienced an increase of roughly 50,000 jobs, a decline from the revised figure of 56,000 jobs added in November, according to data released on Friday. The unemployment rate has fallen to 4.4%, a decrease from a revised 4.5% in November. Economists estimated a net gain of 55,000 jobs in December, with an unemployment rate of 4.5%. With December’s estimated job gains, which are subject to revision, the US economy added a total of 584,000 jobs last year. Data indicates that, excluding recession years, this represents the weakest annual job growth recorded since 2003. The modest gains were largely driven by a handful of specific industries.
“The United States is in a jobless boom,” Heather Long remarked during an interview. “There was almost no hiring in 2025 … we would be talking about job losses in 2025, if it weren’t for health care and social assistance.” In addition to the modest gains observed for December, the payroll estimates for October and November were revised downward by a cumulative total of 76,000 jobs. Nonetheless, the slow rate of employment growth is, in reality, even weaker than what the December report suggests – a truth that will become clearer in the January jobs report. That’s when the BLS will reveal the results of its annual benchmarking process, aligning the more immediate survey-based monthly estimates with the significantly delayed (yet more precise) payroll figures derived from employers’ quarterly tax filings. The initial estimate, released in August, suggested that 911,000 fewer jobs were anticipated 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. This labor market, marked by minimal hiring and minimal firing, has resulted in a growing number of individuals on the margins, striving for entry.
In December, the proportion of individuals who had been unemployed for 27 weeks or more rose to 26%. “Unemployment is increasingly becoming a permanent state rather than a temporary transition,” Nicole Bachaud wrote in a note on Friday. Nonetheless, Friday’s report did feature a few positive highlights, including “stronger-than-anticipated wage gains.” Average hourly earnings saw an increase of 0.3% for the month, bringing the annual rate to 3.8% – a modest enhancement compared to inflation. The labor market was already showing signs of a slowdown as it neared 2025, continuing to stabilize following the substantial economic impacts of the Covid-19 pandemic. However, the gradual cooling transitioned abruptly into a freeze by spring. Long observed that around 85% of the job gains for the year occurred during the initial four months. In April, President Donald Trump declared what he called “Liberation Day,” introducing an extensive array of significant tariffs on various goods brought into the nation. The interplay of that and other notable policy changes resulted in a marked rise in uncertainty and significantly subdued sentiment. “Tariffs, and the uncertainty surrounding them, were one of three big factors that contributed to the ‘hiring recession’ that engulfed pretty much all industries last year,” Long said in an interview.
In addition to tariffs, there has been an ongoing decline in employment within industries that significantly increased their workforce during the pandemic. Furthermore, she remarked that the emergence of artificial intelligence contributed to this development as well. “What happened with AI is firms needed to use their cash to invest in AI, and so they pulled back on hiring in order to free up that cash,” she said. “It wasn’t so much like, ‘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 result was a muted increase in employment, with some sectors experiencing outright declines. The only exceptions were health care – an industry expanding due to an aging population – and leisure and hospitality, which has benefited from a growingly divided economy, where affluent Americans continue to accumulate wealth while a larger portion of middle- and lower-income households face heightened challenges. That was once again the situation in December. Data indicates that leisure and hospitality businesses saw net job gains of 47,000, while the health care and social assistance sectors added another 38,500 jobs. Employment declined in goods-producing sectors, particularly in manufacturing, as well as in retail trade, where seasonal hiring fell short of the levels observed in prior years.
