At a Glance
- Employers added only 50,000 positions in December
- Unemployment dipped to 4.4%, first drop since June
- 2025 ended with the smallest yearly job gain since early 2021
- Why it matters: Sluggish hiring may pressure the Fed to cut rates again
December’s tepid 50,000-job gain closed a disappointing year for U.S. labor markets, with annual payroll growth plummeting to its weakest level since 2021.
The December Numbers
The Labor Department’s latest release shows hiring barely budged from November’s downward-revised 56,000. The jobless rate edged down to 4.4%, but only because more people stopped looking for work.
Businesses remain reluctant to expand headcount. Many firms hired aggressively after the pandemic and now say they have enough staff. Others cite shifting tariff policies, sticky inflation, and rapid adoption of artificial intelligence that could replace human roles.
- December data is the first clean labor-market reading since September
- October’s report was scrapped during a six-week government shutdown
- November figures were distorted by the shutdown that ended Nov. 12
A Sharply Cooling Trend
Hiring momentum collapsed after April’s sweeping tariff announcements. Monthly job creation averaged:
| Period | Average Monthly Gain |
|---|---|
| Jan-Mar 2025 | 111,000 |
| Jun-Aug 2025 | 11,000 |
| Nov 2025 | 22,000 |
Annual payroll growth through November totaled just 770,000, far below the 1.9 million recorded in the prior 12-month span. Preliminary benchmark revisions suggest the March 2025 count could be cut by 911,000, and Fed Chair Jerome Powell believes current figures may still overstate gains by roughly 60,000 a month.
What Comes Next
The Federal Reserve trimmed its key rate three times last year to cushion the slowdown. Markets now watch the January 27-28 meeting for another possible cut if data stay soft.
Still, the economy grew at a 4.3% annual pace last summer, helped by robust consumer spending. Analysts expect spring tax refunds from last year’s tax legislation to lift 2026 growth-and possibly hiring.
Yale Budget Lab’s Martha Gimbel warned:
> “I’m really looking for a lot of that weakness to reverse in December, and if it doesn’t, I am going to start getting much iffier about the labor market.”
Inflation remains above the Fed’s goal, with consumer prices up 2.7% in November from a year earlier, eroding real wages.
Key Takeaways
- December’s report confirms a marked hiring slowdown
- Benchmark revisions may show even weaker 2025 job growth
- Fed officials could pause rate moves until clearer trends emerge
Whether 2026 brings a hiring rebound may hinge on consumer stamina, tariff clarity, and how quickly firms deploy labor-saving technology.
