The US labor market showed modest hiring activity last month, with employers adding 50,000 positions in December according to data released by the Bureau of Labor Statistics. This figure fell slightly below economist expectations of approximately 73,000 jobs and contributed to what turned out to be the slowest year of employment growth since the coronavirus pandemic.
Revisions to prior months indicated weaker labor market conditions than initially reported, with the government estimating 76,000 fewer jobs were added during October and November combined. October proved particularly challenging, as a government shutdown led to a loss of 173,000 jobs. The unemployment rate, which had risen to 4.6% in November, declined to 4.4% in December. For the full year 2025, employers added 584,000 positions, compared with 2 million jobs added during 2024.
The subdued hiring figures come as the Federal Reserve prepares for its next policy meeting at month’s end to determine whether to adjust interest rates currently set in a range of 3.5% to 3.75%. Economists have characterized the current labor market as being in a “no hire, no fire” phase, where job growth continues at a restrained pace. Samuel Tombs, chief US economist at Pantheon Macroeconomics, noted that December’s employment data remained weak enough to suggest the possibility of interest rate cuts as soon as March. Federal Reserve officials have signaled a pause in rate reductions is likely, with internal documents from December showing division among board members regarding future policy direction.
The weak employment report has intensified disagreements between Trump administration officials and the Federal Reserve regarding monetary policy. Treasury Secretary Scott Bessent recently urged the central bank to continue reducing interest rates, arguing that lower rates represent the missing ingredient for stronger economic growth. However, Fed leadership, including Chair Jerome Powell, has indicated caution in cutting rates further, expressing hope that the labor market will stabilize and inflation will cool in the coming year.
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