Key Points
- The U.S. economy added only 50,000 jobs in December, less than expected. The unemployment rate fell to 4.4%.
- The slowdown is attributed to Trump’s trade and immigration policies, as well as the rise of AI.
- The labor market is described as being in a “low-hire, low-fire” mode.
- The Federal Reserve is expected to keep interest rates unchanged at its next meeting.
U.S. job growth slowed more than expected in December, with the economy adding just 50,000 new jobs. Job losses in the construction, retail, and manufacturing sectors dragged down this sluggish performance. However, the unemployment rate unexpectedly fell to 4.4%, indicating that the labor market, while slowing, is not on the verge of collapse.
The mixed report, which also showed solid wage growth, is likely to keep the Federal Reserve on the sidelines. Most economists now expect the central bank to leave interest rates unchanged at its upcoming meeting.
The slowdown in hiring is attributed to a combination of factors. President Trump’s aggressive trade and immigration policies have reduced both the demand for and the supply of workers.
At the same time, companies are holding back on hiring as they invest heavily in artificial intelligence, resulting in a “jobless expansion” in which the overall economy grows but employment remains stagnant.
The labor market is stuck in a “low-hire, low-fire” mode. Companies are reluctant to hire new employees, but they are also not laying off many people. Only 584,000 jobs were created in 2025, a dramatic decline from the 2 million created in 2024.
Despite the weak hiring, wages are still growing at a solid pace, up 3.8% from a year ago. This suggests that worker shortages persist in some industries.
The big picture is a labor market that is losing momentum but not collapsing. The Fed has already cut rates three times, and with inflation still a concern, they are likely to take a “wait and see” approach before making any more moves.
